Lakeland Nurseries Sales Corp., formerly known as Lakeland-Deering Nurseries Sales, et al.

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IN THE MATTER OF LAKELAND NURSERIES SALES CORP. FORMERLY KNOWK AS LAKELAND-DEERIKG NURSERIES SALES ET AL. ORDER, OPINION, ETC., DISMISSING AK AMENDED COMPLAINT IN REGARD TO THE ALLEGED VIOLATION OF THE FEDERAL TRADE COMMISSION ACT Docket 6666. Amended Complaint, July 20, 196fi-Decision, July, 1.968 Order reopening proceedings and dismissing an amended complaint which charged a seller of nursery stock with headquarters in New York City with misrepresenting the growth potential and other characteristics of its nursery products.

ORDER REOPENING PROCEEDINGS JULY 20 , 1966 Whereas, the Commission on June 25, 1957, issued an order to cease and desist in accordance with a consent order agreement entered into by the respondents and counsel in support of the complaint in the captioned proceedings; and LAKELAND NURSERIES SALES CORP. , ET AL. Order Whereas, the respondents and the Commission have heretofore caused to be executed and filed, a certain stipulation dated May 4, 1966, in a certain cause hereinafter set forth, in which some of the captioned respondents are plaintiffs and the Federal Trade Commission, jointly and severaUy, is defendant, said cause having been lately pending in the Unied States District Court in and for the District of Columbia, designated Civil Action No. 419-66; and Whereas, the aforesaid stipulation provided for the dismissal of the complaint in said cause in said Court as aforesaid; and Whereas, the aforesaid stipulation further provided that the . . . Commission may file an amended complaint in said Docket No. 6666 pursuant to Section 3. 28 (b) (1) of the Commission Rules of Practice For Adjudicative Proceedings, 16 C. R. (1964 allegations of the com-Supp. ) 9 3.28 (b) (1), containing the plaint issued in the said Docket No. 8670 and raising the same issues as presented in the proceeding in Docket No. 8670; and the proceeding in Docket No. 6666 may be reopened in accordance with Section 3.28 (b) (1) of those Rules except that the plaintiffs herein and aU respondents in Docket No. 6666 specifically waive the requirement contained in the said Section 3. 28 (b) (1) that the Commission establish changed conditions of fact or law or public interest which is ordinarily required to be established under said Section 3.28(b) (1). AJJ respondents in such amended complaint in Docket No. 6666 shall have the right to interpose an answer thereto and to defend in the said reopened proceeding to the same extent as though the Commission has proceeded to raise the issues of the amended complaint by a reopening of the proceeding in Docket No. 6666 under said Section 3.28(b) (1) in the first instance.

The consent cease and desist order entered in Docket No. 6666 on June 25, 1957 (as reported in 53 F. C. 1189) shall remain in effect at least pending the final determination of the issues raised by the amended complaint to be issued therein. N a party to the proceeding in said Docket No. 6666 wil relitigate or seek to reJitigate the issues raised by the original complaint in Docket No. 6666 with respect to the specific plants which are now governed by the consent cease and desist order issued therein, except that the parties therein shaU have the right to seek modification of the said consent order to cease and desist in the event an order is entered on the amended complaint which may be or appear to any party to be narrower or broader than the said consent order. ; and Amended Complaint 74 F.

Whereas, said stipulation further provided that: "Lake land- Deering Nurseries Sales, one of the resondents in the proceeding in the said Docket Xo. 6666, is the corporate predecessor of plaintiff Lakeland "Iurseries Sales Corp. ; and Whereas, the Commission having reason to believe that the said respondents, or some of them, have violated the provisions of the Federal Trade Commission Act, as is more fully set out in a draft of amended complaint which is hereto attached; and Whereas, the Federal Trade Commission having authority under Section 5 (b) of the Federal Trade Commission Act to reopen a proceeding whenever, in its opinion, conditions of fact or Jaw have so changed as to require such action or the public interest so requires, and said stipulation expressly waives the requirement that the Commission establish changed conditions of fact or law or a showing of public interest, and, that the Commission may proceed to reopen the captioned matter; it is, upon consideration Ordered That the captioned matter be, and it is, reopened for any and all proceedings as may be appropriate under the Commission s Rules for Adjudicative Proceedings insofar as those Rules are applicable hereto, subject only to such matters and things as have heretofore been expressly waived by said respondents in the aforesaid stipulation dated May 4, 1966. It is j,t?,ther onlej'eel That the Commission s amended complaint issue forthwith.

AMENDED COMPLAINT 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 Lakeland X llfseries Sales Corp. , a corporation trading as Lakeland Nurseries Sales, and Henry L. Hoffman, Chester Carity, Lillian Zogheb and Allen Lekus, 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 Lakeland C\urseries Sales Corp. 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 16 West 61st Street in the city of New York, Borough of Manhattan, State of New York. Said corporate respondent also trades as Lakeland C\urseries LAKELAND NURSERIES SALES CORP., ET AL.

Amended Complaint Sales. Said corporation was formerly known by the corporate name of Lakeland-Deering Nurseries Sales. Respondents Henry L. Hoffman, Chester Carity, Li1iam Zogheb and Allen Lekus 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 for sale, sale and distribution of rose plants, chrysanthemum plants, and other nursery products to the public.

As used in this complaint and in the attached proposed form of order the term "nursery products" includes all types of trees small fruit plants, shrubs, vines, ornamentals, herbaceous annuals, biennials and perennials, bulbs, corms, rhizomes, and tubers which are offered for sale or sold to the general public. Included are products propagated sexually or asexually and whether grown in a commercial nursery or collected from the wild state. PAR. 3. In the course and conduct of their business, respondents TIOIV cause, and for some time last past have caused, said products when sold, to be shipped from independent nurseries in the States of Minnesota, Maryland and other states to purchasers thereof Jocated in states other than those in which said shipments originate and maintain, and at all times mentioned herein have maintained, a substantial course of 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, the respondents have distributed circulars, brochures, catalogues and other advertising material through the United States mails to prospective purchasers located outside the State of New York and have furnished advertising material to others for use in soliciting sales, containing numerous statements and representations respecting respondents' status as a grower or propagator of the nursery products they offer for sale. Typical and illustrative of said statements and representations, but not all inclusive thereof, arc the following; The reason we are willing to release part of our precious propagating stock at this time is simply this:

Yes, as OTIe of America s largest nursery organizations, we ve sold many, , FEDERAL TRADE COMMISSION DECISIO Amended Complaint 74 F.

many magnificent rose varieties throughout the years-a good number of them international prize winners. On our annual trips all over the country to visit leading hybridizers, as well as to inspect our o\\'n crops of roses produced in vast growing fields in 6 states, we usually see a total of more than 10 million roses each summer, including the crops of "fciendly rival" nurserymen.

If you should come and visit the vast greenhouses and experimental GARDENS OF TOMORROW" where our Azaleamums are hybridized you \vould see the answer! The respondents' Aza1eamum brochure contains a picture of several rows of plants in bloom growing in a field. Beneath the picture is the caption You are now looking at a few rows in the growing field-showing how Azaleamums look the very first season you plant them. PAR. 5. Through the use of the aforesaid corporate name Lakeland Nurseries Sales Corp." and through the use of the trade name Lakeland !\:urseries Sales " separately or in connection with the statements, representations and illustrations set forth in Paragraph Four hereof, and others similar thereto but not expressly set out herein, and through the use of said statements, representations and ilustrations and of a Garden City, New York, mailing address, respondents have represented, directly or by implication that they actually grow or propagate the nursery products which they offer for sale and sel! and that they own operate or control nurseries, farms 01' properties in or on which the said products are grown or propagated. PAR. 6. In truth and in fact, the respondents do not actually grow or propagate the nursery products which they offer for sale and sell, nor do they own, operate, or control nurseries, farms or properties in or on which said products are grown or propagated.

Therefore, the statements and representations as set forth in Paragraphs Four and Five hereof were and are false, misleading and deceptive.

PAR. 7. There is a preference on the part of members of the purchasing public for dealing directly with nurseries and growers of nursery products rather than with retailers, dealers or other intermediaries, such preference being due to a belief that by dealing directly with the nurseries or growers, various advantages may be obtained. The Commission takes offcial notice of the preference.

PAR. 8. In the further course and conduct of their business as :

LAKELAND NURSERIES SALES CORP" ET AL.

Amended Complaint aforesaid, respondents have made numerous statements and representations respecting the amount and size of blossoms, duration of blooming period, and other blooming characteristics of the mirsery products they offer for sale and the rate of growth, appearance, height, size and other physical characteristics which can and wil be achieved with said products by purchae,ers thereof. Typic&1 and ilustrative of said statements and representations but not alj inclusive thereof, are the following: A. In connection with the offering for sale of the "X early Wild" rose, also advertised as a Superblooming Hedge Rose. Yes, just imagine the incredible gardening thrils that now await you jf you accept this offer promptly. The thril of seeing fresh, colorful fragrant 3-inch roses burst into lavish clusters of 10, 12 and even 15 blossoms to a single stem. . . roses that erupt into fiery red 'n pink MASSES OF 30, 40 and even 50 NEW ROSES day after day, week after ,yeek from one single plant. . . roses to fill every room in your house with their color and exotic fragrance all summer long from just one single plant. . . roses that literally pour out their blossoms like a never-ending fountain of beauty in June, July, August, September, October, J\Tovember . . . right up to first frosts and even beyond. . . and all from one single plant Roses that start blooming a few weeks from now in your garden and once established wil literally give you THOUSANDS OF BLOOMS each year. . . from each single plant! Leading Eastern Agriculture College Reports: This Fabulous Rose Variety Produced 4 076 Roses aji from one single plant! Requires Less Care! An Ideal Rose for Beginners! So Easy To Plant and Grow for a Lifetime of Gorgeous Bloom! And because it can. so easily withstand conditions that would kil off its more te!1der cousins, Xearly Wild is almost a foolproof rose-guaranteed to thrive and produce heavy masses of bloom for you even if you ve never planted a seed before in your life! ,!o In addition, the brochure, advertising this rose, contains a close-up photograph of rose blossoms which purports to be photograph of the blossoms produced by the "Nearly Wild" rose plant.

E. In connection with the offering for sale of the Ray Bunge Scarlet Showers Rose.

Soars 20 Feet High. . . Spreads 40 Feet Wide The PiTst GTowing Season For this wonder rose streaks skyward at a rate simply unheard of in roses. . . as much as 18 inches in a single week. . . Amended Complaint 74 F.

Up to 300 Giant Roses In Bloom At One Time-Dramatic Fountains of Color 5 Months of The Year! your, yardif you canto plantspare a fewit, minutesyou canof timeownand athefew inchesrose ofthatgrounddefies rubber tree roots below zero winters, even semi-shaded conditions. , . to soar higher than any other everblooming, climbing rose has ever been known to grow before! Imagine the glory of a rose bush that bursts into gigantic blossoms up to 5 inches across. . . roses that burst again and again into fiery masses of color in June, July, August, September, Octo her . . . until snow starts to fly! As little as 3 hours daily sunHght produces ravishing masses of bloom! In addition the brochure, advertising this rose contains a picture of a house with roses growing over it from the ground to the roof.

C. In connection with the offering for sale of the Wilson Climbing Doctor rose, also known as the Climbing Doctor. Roses that burst into everblooming fountains of color . . soaring up to 11 feet high. . . up to 20 feet wide! Roses that flare again and again into living walls of color in June, July, August, September, October. . , right up to wintry frost. Gives you a lavish outpouring of exquisite hybrid tea-Eke roses from June to Frost. Blossoms are truly gigantic. . . usually measuring 6 to 8 inches across! Soars Approx. 11 feet high. . .

A Few Minutes to Plant and A Bare Spot Becomes The Showplace of the :"eighborhood.

In addition the brochure advertising this rose contains a picture of a rose 8 inches wide at the widest point described as Actual Size of Bloom; a picture of a young lady before a background of roses most of which are large enough to cover the major portion of her face; and a picture of a woman standing beside a wide spreading rose bush which is approximately twice her height.

,, LAKELAND NURSERIES SALES CORP. , ET AL. Amended Complaint D. In connection with the offering for sale of chrysanthemums known as Fragramums.

they the first fr-agrant chr-ysanthemums in garden history! You ll Get Hundreds of Sweet-Scented Mums This Season From Each Single Plant-Thousands More Year After Year. And you can do it in just 20 minutes whether you re an expert gardener or the greenest beginner. Because they re shipped to you ready-to-plant in a special "grow enroute" wrap, and it only takes a few minutes to scoop out a few holes and plant them.

It means mounds and mounds of fiery-hued chrysanthemums. . . as many as 200 . . . 300 . . . even 400 blossoms on a single plant. . . some up to 4" across. . . blossoms clustered so closely on the plant, you can barely push your hand into the mass to try to count them. A Fragramum Planting Gives you Lovely, Sweet-Scented Banks of Color in August, September, October, November. . . Right Up To Frost And BeYDnd! E. In connection with the offering for sale of chrysanthemums known as Azaleamurns.

and then cover themselves with solid unbroken masses dazzling 2 to 4 inch blossoms! beginning in August (sometimes even in July)-each of these wDnderplants erupts into a gigantic firebal1 of color spreading nearly a full 8 feet around. Then in September, October, November-instead Df fading, instead Df dropping its blooms-each and every Azaleamum bursts again and again into a continuous never-ending shower of hundreds, even thousands of colorful gold, white, pink or flaming red blossoms! PROBABLY WORLD'S GREATEST FLOWERING PLANT!" . . . said garden editor of N.Y. Journal American: " 500 or 600 blooms open at one time is moderate; many people have reported over 1,000 blooms and in a few cases the record even stretches up to 2 000 blooms!" G. A. Bernard, Illinois writes:

You say 600 flowers. I'll bet there are 1 000 flowers on one single plant!" And you can do it all with just 6 plants we send you. . . in just minutes. . . whether you re an expert gardener or the greenest beginner. Because they re shipped to you packed in their Dwn "grow enYoute " containers and it only takes 20 minutes to scoop out a few holes and plant them!.. .

Amended Complaint 74 F.

PAR. 9. Through the use of the aforesaid statements and representations and others similar thereto but not expressly set out herein, the respondents have represented, directly or by implication, that all purchasers of plants offered for sale and sold by them would obtain or could obtain the results listed below for each plant irrespective of the purchaser s lack of gardening experience or horticultural knowledge or of any required special care and handling of the plant.

A. Results from a single Nearly Wild Rose plant (also called a Hedge Rose) in the first season it is planted. 1. 1 000-4 076 blossoms.

2. The majority of the blooms will be 3 inches in diameter. 3. Continuous blooming from June to November. 4. Blossoms that resemble those shown in the close-up photo in the brochure advertising the Nearly Wild Rose. 5. 30 to 50 blossoms in a single day.

B. Results from a single Ray Bunge Scarlet Showers rose plant in the first season it is planted. 1. A growth of 18 inches in height in a single week, and 20 feet in height and 40 feet in width in the season. 2. The majority of blossoms wil be 5 inches in diameter. 3. Repeat blooming.in each month from June to October. 4. At least 300 blossoms.

5. Only 3 hours of sunlight a day are necessary to obtain the advertised results.

C. Results from a single Wilson s Climbing Doctor rase plant in the first season it is planted.

1. A growth of 11 feet in height in the season. 2. The majority of blossoms wil be 6-8 inches in diameter. 3. Continuous. blooming from June to October. D. Results from a single Fragramum chrysanthemum plant the first season it is planted.

1. 200 to 400 blossoms in the first season and at least 1 000 blossoms per season each subsequent season. 2. Many blossoms 4 inches in diameter.

3. Continuous blooming from August to November. 4. The blossoms wil be fragrant.

E. Results from a single Azaleamum chrysanthemum plant in the first season.it is planted.

1. 500 to 2 000 blossoms.

2. Many blossoms wil exceed 2 inches in diameter. 3. Continuous blooming from August to November. PAR. 10. In truth and in fact, many purchasers of the nursery LAKELAND NURSERIES SALES CORP. , ET AL. Amended Complaint products offered for sale by respondents could not obtain the results hereinabove set forth for the Nearly Wild rose plant, the Scarlet Showers rose plant, the Wilson s Climbing Doctor rose plant and the Azaleamum chrysanthemum plant, and, in the case of the Fragramum chrysanthemum plant could not obtain such results.

The statements and representations as set forth in Paragraphs , f2.lse, mislead- Eightingand Nineandhereof weredeceptive.and are exaggerated PAR. 11. In seasons subsequent to the season of initial offering the respondents have distributed advertising material in which they represented that said Scarlet Showers, Wilson s Climbing Doctor and Fragramums were new at the time of the then current offer and were being offered to the public for the first time and that all varieties of Azaleamums were new in 1960 and were being offered to the public for the first time. PAR. 12. In truth and in fact the said Scarlet Showers, Wilson s Climbing Doctor and Fragramum plants were not new at the time of the then current offers and had been offered to the public by the respondents in preceding seasons and some varieties of Azaleamums had been offered by others in preceding seasons. Therefore the statements and representations as set forth in Paragraph Eleven hereof were and are false, misleading and deceptive.

PAR 13. In the conduct of their business, at all times mentioned herein, respondents have been in substantial competition in commerce, with corporations, firms and individuals ,in the sale of nursery products of the same general kind and nature as those sold by respondents.

PAR. 14. Respondents by and through the use of the aforesaid acts and practices place in the hands of retailers and dealers the means and instrumentalities by and through which they may mislead and deceive members of the public in the manner and as to the things hereinabove alleged. PAR. 15. The use by respondents of the aforesaid false, misleading and deceptive statements, 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 representations were and are true and into the purchase of substantial quantities of nursery products offered for sale by respondents by reason of said erroneous and mistaken belief.

PAR. 16. The aforesaid acts and practices of respondents, as . . ___ .. _. ___. __.__. ____ ___ Initial Decision 74 F.

herein alleged, were and are al1 to the prejudice and injury of the public and of respondents' competitors and constituted, and now constitute, unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act. Mr. Herbert L. Blume and Mr. J. Michael Frascati supporting the complaint.

Bass Friend New York, N. , by Mr. Solomon H. Friend for respondents Lakeland Nurseries Sales Corp. and Mr. Henry L. Hoffman; and Zalk, Rubel Perret New York, N. , by Mr. Joseph Zalk for respondents Mr. Chester Carity, Ms. Lilian Zogheb and Mr. Allen Lekus.

INITIAL DECISION BY DONALD R. MOORE, HEARING EXAMINER JANUARY 12 , 1968 TABLE OF COKTEKTS Page PRELIMIK ARY STATEMENT n FINDINGS OF FACT n __' n 1. Respondents and Their Business - 15 II. Representations Regarding Business Status A. The Basic Issue B. Consumer Preference C. Respondents ' Involvement in the Nursery Business III. Representations Regarding Plant Characteristics A. Nearly Wild Rose B. Ray Bunge Scarlet Showers Rose C. Wilson s Climbing Doctor Rose D. Fragramums E. Azaleamums IV. Representations of Plants as " New A. Fragramums n _ B. Azaleamums C. Rose Plants CONCLUSIONS n _'u n_ _- 53 ORDER n n-- LAKELAND NURSERIES SALES CORP. , ET AL. Preliminary Statement PRELIMINARY STATE:vent This proceeding involves an amended complaint, issued by the Federal Trade Commission on July 20 , 1966 , which was duly served on all respondents, namely, Lakeland Nurseries Sales Corp. (formerly known as Lakeland-Deering Nurseries Sales), a corporation trading as Lakeland Nurseries Sales, and Henry L. Hoffman, Chester Carity, Lilian Zogheb, and Allen Lekus, individually and as offcers of the corporation. The amended complaint was issued pursuant to Commission order entered on July , 1966, reopening the proceedings in this docket. The original complaint was issued on October 26, 1956 , and the proceeding based thereon was concluded by the entry of a consent order on June 25, 1957. This consent order dealt with two plants Lythrum :Iorden Gleam and Shasta Daisy. (Lakeland-Deering Nurseries Sales 53 F. C. 1189 (1957).

The amended complaint, which charges violation of Section 5 of the Federal Trade Commission Act, alleges that respondents have misrepresented the nature of their business, the blooming characteristics of the nurscry products they sell, the results obtainable by purchasers, and the newness of certain nursery products.

Before reopening this proceeding and issuing the amended complaint, the Commission, on November 1 , 1965 , had issued a new complaint (Docket 8670) that cited Lakeland Nurseries Sales Corp. , Henry L. Hoffman, and Chester Carity as respondents. The allegation of that complaint were substantially similar to those contained in the amended complaint now before us. On December 20, 1965, respondents moved to dismiss the complaint in Docket 8670 on the ground that instead of issuing a new complaint, the Commission should have reopened the proceeding in Docket 6666. When this motion was denied, respondents, on February 17, 1966, filed suit in the United States District Court for the District of Columbia, seeking a declaratory judgment and a mandatory injunction to restrain the proceedings. This suit was dismissed on May 19, 1966, pursuant to a stipulation between the parties that provided for dismissal of the proceeding in Docket 8670 and for reopening of Docket 6666. (Lakeland Nurseries Sales Corp. v. Dixon (D. , Civil Action No. 419- 66). ) The complaint in Docket 8670 was dismissed by the Commission in an order dated May 12, 1966 (69 F. C. 732J. Thereafter, by order dated July 20, 1966, the Commission reopened the instant proceeding and issued its amended complaint, which Preliminary Statement 74 F. was ultimately assigned for trial to this hearing examiner. Answers to the amended complaint were filed by respondents Lakeland and Hoffman on August 23, 1966, and by respondents Carity, Zogheb, and Lekus on September 13 , 1966. In these answers, the respondents made certain factual admissions, but they denied most of the allegations of the complaint and specifically denied any violation of law.

Following a series of prehearing conferences (Tr. 1-181), there were 17 days of hearings between May 1 and June 1 1967, in New York, New York; Minneapolis, Minnesota; Dallas Texas; and Los Angeles, California. At these hearings, testimony and other evideI.ce were offered in support of and in opposition to the allegations of the amended complaint. Such testimony and other evidence were duly recorded and filed in the offce of the Commission.

The evidentiary record comprises 2 680 pages of transcript and more than 150 documentary exhibits. The parties were represented by counsel and were afforded full opportunity to be heard, to examine and to cross-examine witnesses, and to introduce evidence bearing on the issues. After the presentation of evidence, proposed findings of fact and conclusions of law and a proposed form of order, as well as reply briefs, were filed by counsel supporting the complaint and by counsel for respondents. Under Section 3. 51 (a) of the Commission s Rules of Practice (effective July 1, 1967), the time for filing this initial decision was extended to January 12, 1968. Proposed findings not adopted, either in the form proposed or in substance, are rejected as lacking support in the record or as involving immaterial matters.

After carefully reviewing the entire record in this proceeding, together with the submittals of the parties, the hearing examiner finds that this proceeding is in the interest of the public; and on the basis of such review and his observation of the witnesses he makes the following findings of fact, enters his resulting conclusions, and issues an appropriate order As required by Section 3.51 (b) (1) of the Commission s Rules of Practice, the findings of fact include references to principal supporting items in the record. Such references to testimony and exhibits are thus intended to comply with that Rule and to sene as convenient guides to the principal items of evidence supporting the findings of fact, but these record references do not 10 The Rmended (,complaint may be referred to hereafter simply as "complaint. LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact necessarily represent complete summaries of the evidence considered in arriving at such findings. re reference is made to proposed findings submitted by the parties, such references are ordinarily intended to include their citations to the record. References to the record are made in parentheses, and certain abbreviations are used:

CPF-Proposed Findings, Conclusions, and Order of Complaint Counsel.

CRB-Reply Brief of Complaint Counsel.

CX-Commission Exhibit.

RPF -Respondent' s Proposed Findings, Conclusions, and Order. RRB-Respondents' Reply Brief.

RX-Respondents' Exhibit.

Tr. Transcript.

References to proposed findings and other submittals of counsel are ordinarily to page numbers-for example, CPF 19. Sometimes references to testimony cite the name of the witness and the transcript page number without the abbreviation Tr. for example, Hoffman 2163.

Counsel supporting the compl2.int may be variously referred to as complaint counsel, Government counsel, or the Government and witnesses called by Government counsel may be referred to as Government witnesses.

FINDINGS OF FACT 1. Respondents and Their Business Respondent Lakeland Nurseries Sales Corp., formerly known as Lakeland-Deering Nurseries Sales, 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 16 West 61st Street, "'ew York, New York. It also trades under the name Lakeland Nurseries Sales. (Amended Complaint, Par. One; Answers of respondents, Par. One; Order Reopening Proceedings, p. 2; Tr. 6 , 17, 2162, 2167; CX 2 A; RPF ) (Respondent Lakeland Nurseries Sales Corp. may be referred to as Lakeland or as the corporate respondent. Respondent Henry L. Hoffman is president of Lakeland, and respondent Chester Carity is vice president. They are the only offcers of the corporation. As offcers, directors, and principal stockholders, they formulate, direct, and control the acts and practices of the corporate respondent, and they have done so at all times material to the issues involved in this proceeding. Their Findings of Fact 74 F.

business address is the same as that of the corporate respondent. (Hoffman 2122, 2162-67.

Lakeland is a closely held corporation, with approximately 50 percent of the stock owned by Mr. Hoffman; about 33 percent by Mr. Carity; and 15 percent by Howard W. Friedman. These three stockholders constitute the Board of Directors. Mr. Hoffman and Mr. Carity actively participate in the operation of the corporate business. Although their activities are in their capacities as corporate offcers, the evidence indicates that the corporate structure is more a matter of form than of substance. (Hoffman 2163-67; Tr. 2254-57; see also Andrews 1117, 1244 1250- 1259- , 1270- 1288-90; Burks 1357- 1405-06; Conklin 1760- 1769- , 1784-85; compare RPF 7. Respondents LiJian Zogheb and Allen Lekus have not been offcers or directors of Lakeland for about 10 years (Tr. 2214- 2255-56), and there is no evidence of their participation in the practices challenged by the amended complaint. In the course of trial, Government counsel offered no opposition to a motion to dismiss as to these two individuals, and the motion was accordingly granted. (Tr. 2265- , 2674; see CPF 5. ) Thus, the term "respondents, as used hereafter, is not intended to include the respondents Zogheb and Lekus.

Respondents are now, and for several years have been, engaged in the advertising, offering for sale, sale, and distribution of rose plants, chrysanthemum plants, and other nursery products to the public. (For purposes of this proceeding, the term "nursery products " includes all types of trees, small fruit plants, shrubs vines, ornamentals, herbaceous annuals, biennials and perennials, bulbs, corms, rhizomes, and tubers. ) (Complaint, Par. Two; Answer of respondents Lakeland and Hoffman, Par. 2; CX 1; RX 35 Andrews 1238-39; Tr. 2254.

In tbe course and conduct of their business, respondents now cause and for several years have caused nursery products, when sold, to be shipped from nurseries in Minnesota and Maryland and other states ("independent" nurseries with which Lakeland has contractual relations) to purchasers located in states other than those in which such shipments originated. Respondents maintain and for several years have maintained a substantial course of trade in nursery products in commerce, as "commerce" is defined in the Federal Trade Commission Act. Respondents' annual sales total more than $1 milion. (Complaint Par. Three; Answer of respondents Lakeland and Hoffman Par. 3; Andrews 1111, 1125- , 1171-73; Tr. 2449. ...

LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact In the conduct of their business, respondents have been in substantial competition in commerce with corporations, firms and individuals in the sale of nursery products of the same general kind and nature as those sold by respondents. (In urging a finding to this effect, complaint counsel erroneously state that the corresponding allegation in the complaint (Par. Thirteen) was admitted in the answer of the corporate respondent (CPF 81). Actually, all the respondents denied the allegations of Par. Thirteen, but there appears to be no real dispute about this finding. The evidence, particularly the evidence offered by respondents, demonstrates-and respondents virtually concedethe validity of this finding. For example, RXs 44, 45, 113-127; see Tr. 2581-2604; see also Answer of respondents Lakeland and Hoffman, Pars. 13-15.

II. Representations Regarding Respondents' Business Statv"" Paragraph Five of the complaint alleges that "respondents have represented, directly or by implication that they actually grow or propragate the nursery products which they offer for sale and sell and that they own, operate or control nurseries farms or properties .in or on which the said products are grown or propagated." According to the complaint, these representations have been made:

(1) Through the use "separately" of the corporate and trade names (Lakeland Nurseries Sales Corp. and Lakeland Nurseries Sales) ;

(2) Through the use of the corporate and trade names in connection with certain representations and ilustrations cited Paragraph Four of the complaint; and (3) Through the use of such representations and ilustrations in conjunction with a Garden City, New York, mailing address. The complaint (Par. Four) cites as " (tJ typical and ilustrative " but "not aU inclusive " four representations from respondents' advertising and promotional literature, and Government counsel rely on these representations in their proposed findings (CPF 8-9). They refer, as does the complaint (Par. Five), to other representations "similar thereto " but, in the absence of any record references to other such representations, the examiner assumes that the Government's case in this regard is based on the quoted representations, as follows: (1) . . . The reason we are v.lling to release part of our precious propagating stock at this time is simply this: " (CX 4 C, p. 3. (2) Yes, as one of America s largest nursery organizations, we ve sold Findings of Fact 74 F.

many, many magr:dficent rose varieties throughout the years-R good number of them international prize winners. On our annual trips all over the country to visit leading hybridizers, as well as to inspect our own crops of roses produced in vast growing fields in 6 states, we usually see a total of more than 10 milion roses each summer, including the crops of "friendly rival" nurserymen. (CX 6 C, pp. 1- (3) If you should come and visit the vast greenhouses and experimental GARDENS OF T0:v0RROW" where our Azaleamums are hybridized you would see the answer (CX 8 C, p. 1.) (4) You are now looking at a few rows in the growing fields-showing how Azaleamums look the very first season you plant them--aption in Lakeland brochure accompanying a picture of several rows of blooming plants growing in a field. (eX 8 B.

The complaint does not charge that these advertising statements as such constitute a representation that respondents actually grow or propagate the nursery products they sell and that or prop-respondents own, operate, or control nurseries, farms, propagated. Theseerties where such products are grown or advertising statements are challenged only when used either in conjunction with the corporate and trade names featuring the words "Lakeland Nurseries Sales" or in conjunction with the Garden City mailing address. Thereby the Government seems to concede that these advertising statements alone provide no basis for a charge that respondents have represented themselves as growers or land owners.

A. The Basic Issue Thus, the real issue is whether respondents' use of the word nurseries" in their corporate and trade names is false, misleading, and deceptive. This question must be resolved in any event the cor-since the co",plaint alleges (Pars. Five and Six) that porate and trade names "separately" constitute a misrepresentation. The other advertising statements cited and the Garden City mailng address appear to be makeweights. (Compare CRB 2. In connection with the Garden City maiiing address, the examiner rejects the proposed finding of complaint counsel that The use of the Garden City mailing address has created confusion among the public as to whether or not Lakeland has a nursery at that address." The testimony cited fails to support , 350. ) The this proposed finding. (See CPF 12; Turpin 336form Jetter used by the Garden City Chamber of Commerce per- (RX 1) to answer inquiries about Lakeland is suggestive, haps, but it does not prove that the Garden City address has led the public to believe Lakeland is a grower. The supposed inference that the address may lead the public to believe Lakeland LAKELAND NURSERIES SALES CORP., ET AL.

Findings of Fact has gardens there, is rejected. (For respondents' explanation of the use of this address, see Hoffman 2203- 2219. The record demonstrates the essential truthfulness of the advertising statements quoted in Paragraph Four of the complaint (supra p, 5). Lakeland did own propagating stock (budwood). Lakeland was and is an "organization" in the nursery industry (infra p. 20), and Mr. Hoffman did mak trips to see hybridizers and to view Lakeland's "own crops of roses" as well as the crops of competitors. The evidence also substantiates the advertised claims regarding the hybridization of the Azaleamums and the picture and text in ex 8 B concerning the growing fields. The Azaleamum advertisement did not represent that Lakeland owned the gardens and fields pictured and described. (Brownell 2055; Burks 1359- , 1356, 1382, 1387-89; Andrews 1146- , 1244-61; Hoffman 2199-2201; RXs 20, 61-64; Davis 1889-1906, 1910-13. The examine,. recognizes that such literal truthfulness would not necessarily save the advertising statements cited in the complaint (Par. Four) if the "net impression" likely to be made on the public were deceptive (Rodale Press, Inc. D. 8619, June 20 1967 (Opinion, p. 26 (71 F. C. 1237J). Nevertheless, the examiner cannot find that these statements-either alone or in conjunction with the corporate or trade names or in conjunction with the Garden City address-may properly be interpreted as making the representations of grower status a1Jeged in Paragraph Five of the complaint.

In relying on inference (CPF 10) and on "the net overall effect of Lakeland' entire advertising approach" (CRB 2), complaint counsel minimize the impact of the word "nurseries" in the corporate and trade names. They state: The Commission s complaint is not so much directed to the use of the term "nursery" and its variations but rather the use of that term and its variations within such a context of advertising material as may lead the consumer to believe that he is purchasing his stock from one who is a farmer or grower in the most commonly accepted sense of the word. (CRE 2. But, in the examiner s opinion, the statements quoted in Paragraph Four of the complaint and relied on by complaint counsel (CPF 9) do not provide such a "context" as to lead the consumer to believe Lakeland is a grower It is worth noting that the original complaint did not challenge the use of the word "nurseries" in the corporate and trade names. This is not to suggest that the Commission, after re- Findings of Fact 74 F.

such a corporate or trade name merely signifies a seller of nursery products.

Although the word "nursery" is widely used throughout Government publications and other reports in the record, the word is nowhere clearly defined as Jimited to growers of nursery stock. In fact, the contrary appears. Despite the dictionary definitions, the term "nursery" appears to be used JooseJy for distributors of nursery stock, regardless of whether they grow any of it. Complaint counsel have cited no definition that restricts the use of the term "nursery" in a business name to a business entity that grows a1l or most of, indeed, any of the nursery products it sells, or that otherwise specifies either the commercial meaning or the pu blic understanding of such a business name; and the examiner has found no such definition.

The only testimony cited on the subject is that of Mr. Andrews (supra p. 21). Complaint counsel rely on Mr. Andrews' definition of a "nursery" as being "a location or place where nursery stock is grown" (CPF 13), but they ignore his qualifications of this definition in connection with the use of the word "nursery" in the business of sellng nursery products (supra p. 21). Complaint counsel confuse the concept of a nursery as a place where plants are grown with the concept of a nursery business as a commercial entity that sells the products grown by a nursery. Complaint counsel, citing Words and Phrases (Vol 28A p. 798), contend that "The words 'nursery' and ' nurseryman are clearly defined to connote the growing function primarily, but then somewhat inconsistentJy state: "While a nurseryman may also be a middleman, the. two terms are mutual1ly exclusive. (CPF 20; compare CPF 28'-29; Tr. 2628-31.) Moreover, although the complaint (Pars. Five and Six) is predicated on the notion that a nursery grows the nursery products it sells, the record shows, and complaint counsel concede (CPF 13, 28-29; Tr. 2628-31), that a nursery may sell at least some nursery products grown by others. (See footnote 3 infra p. 23. ) This has also been recognized by the Commission. In each of two cases cited by Government counsel, the use of the word "nurseries" or "nursery" was prohibited unless the respondent so styling itself owned and operated or directly and absolutely controlled a nursery or farm where " substantial proportion of the nursery stock sold and distributed by it . . . is grown (emphasis addedJ. First National Nurseries, Inc., 20 C. 53 , 60 (1934); Rochester Nurseries, Inc. 17 F. C. 95 100 (1932). In the First National case, the Commission referred , LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact to anew York State regulation that, in apparently distinguishing "nurseries" from "dealers " defined "dealers in nursery stock as sellers "who do not themselves grow more than 25 percent of the stock handled by them." (20 F. C. at 58) But cf. Earl E. May Seed Co. 26 F. C. 78 , 86 (1937); Atlas Rose Farms, Inc. 55 F. C. 881, 884 (consent order, 1958). Since, both as a matter of fact and as a matter of law, a business entity that sells plants that it has not grown may call itself a "nursery, " or otherwise use the word in its business name, the conclusion is inescapable that the word "nursery" in a business name does not constitute a representation that the business so designated is the grower of the products it sells. There has been no showing that the use of the word "nursery" or nurseries" in the name of a business has the capacity and tendency to lead the purchasing public to believe that such a business is the grower of the plants that it sells. To summarize: In the examiner s opinion neither the evidence nor reasonable inference supports the conclusory allegation of Paragraph Five that respondents have represented themselves as growers of the products they sell or as owners of the land where such products are grown.

B. Consumer Preference Even if a finding were to be made that Lakeland had misrepresented itself as a grower, nursery owner, or nursery operator, there would remain a serious question as to the materiality of the misrepresentation. The complaint has put this question in issue by invoking "offcial notice" of "a preference on the part of members of the purchasing public for dealing directly with nurseries and growers of nursery products rather than with retailers, dealers or other intermediaries, such preference being due to a belief that by dealing directly with the nurseries or growers, various advantages may be obtained." 3 (Complaint, Par. Seven. ) The Commission apparently viewed the existence of such a preference as establishing the materiality of the alleged misrepresentation.

Although in the prehearing stage the examiner considered 3 The theory of the Government, as exemplified by Pars. Five and Six of the complaint, is that a " nursery" is It grower of the plants it sells, (See supra p. 6. ) But the references in Par, Seven to dealing " with nurseries and growers " and to dealing " with the nurseries growel' " (emphasis added) seem to draw a distinction b/Ctween the two. This is doubtless an inadvertency, although in the examiner s view, the existence of such a distinction is borne out by the evidenr:e. Moreover, the record reflects some inconsistency on the part of Government counsel that is consistent with the distinction suggested by the language of Par. Seven, (See for example, CPF 28-2g; Tr, 2628-31; see sapra, p, 22: infra, p. 29, Findings of Fact 74 F.

himself bound by the offcial notice set forth in the complaint ' he now finds that the actualities of distribution methods in the nursery industry, as shown by respondents' evidence (RXs 83-89), suffciently negate the consumer preference in question so as to rebut the offcial notice taken by the Commission. (Compare CPF 25-26. ) In the absence of offcial notice, the evidentiary record does not contain reliable, probative, and substantial evidence of the existence of such a preference. The examiner s ruling that the offcial notice has been rebutted by respondents turns in part on the relative paucity of decided cases-particularly recent cases-concerning the specific preference here in question, compared to the uscores if not hundreds" of cases that led the Commission, in Manco Watch Strap Co., 60 F. C. 495, 511 (1962), to take offcial notice of a public preference for American-made goods.

The cases cited by complaint counsel as the basis for the offcial notice taken by the Commission in Paragraph Seven of the complaint do not support the existence of the public preference offcially noticed. Complaint counsel state (CPF 21-22) that in Rochester Nurseries, Inc. 17 F. C. 95 (1932), and Fi1' st National Nurse1"ies, Inc. 20 F. C. 53 (1934), it was alleged and proven" that:

The purchasing public prefers to purchase nursery stock from the producer thereof, to wit, from those who own, control, and operate the nurseries in which such nursery stock is propagated, cultivated, grown, and produced. The purchasing public greatly desires to procure nursery stock that is genuine dud true to the name, kind, and quality for which it is offered for sale. The purchasing public is of the opinion that in making purchases directly from such producers thereof, there is less risk of mistakes in the true name, kind, and quality of the stock so being offered for sale and sold, and a greater probability that the product is genuine and true to the name, kind, and quality for and as which it is so offered and sold, It is true that such an aiJegation was made in the complaint in the First National case (20 F. C. at 54-55), but no corresponding finding was made by the Commission. Instead, the Commission found that "Permanence, stabilty, and responsibility on the part of sellers of nursery stock are of peculiar importance to their customers. . . ." (20 F. C. at 59.

It appears that there was not even such an allegation as to , See the examiner s Order Affrming Denial of Motion to Strike, dated March 27 . 1967. Ii Section 7 Cd) of the Administrative Procedure Act c. 556 (e). authorizes agency decisions resting on offcial notice of a material fact not appearing in the evidence in the record " PI' jded that a party, on timely request, is afforded " an opportunity to show the contrary, . . .

LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact preference in the Rochester Nurseries case (17 F. C. at 95-96). In any event, there was no finding of the existence of any such preference. A finding substantially identical to that quoted from the First National case was made (17 F. C. at 99). Moreover, in both of these cases (the only "fully contested" cases cited by the Government), there were affrmative representations of grower status, contrary to fact, and misrepresentations as to size and .business status. In neither case was there a finding that the use of the word "nurseries" in the corporate name standing alone was deceptive. In each case, the finding was that the use of the word "nurseries " in the corporate name taken in connection with statements made)) in advertising had the capacity and tendency to mislead and deceive. (17 F. at 99; 20 F. C. at 59.

The other three formal cases cited by complaint counsel did not involve any evidentiary hearings and thus they provide scant basis for the offcial notice presumably based on them. Two of the cases were brought more than 30 years ago' Earl E. May Seed Co. , 26 F. C. 78 (1937) (agreed stipulation of facts); Anna M. Gibbin 17 F. C. 177 (1932) (default). The more recent case of Atlas Rose Farms, Inc. 55 F. C. 881 (1958), was settled by entry of a consent order.

Finally, the stipulations referred to by complaint counsel in their proposed findings (Stipulation 7929, 46 F. C. 1204 (1949); and Stipulation 8659, 52 F. C. 1705 (1955)) add little to support the claimed public preference.

The Commission is "entitled to rely on estabHshed general facts within the area of its expertise. . . . Brite Manufacturing Co. v. FTC 347 F. 2d 477, 478 (D. C. Cir. 1965) ; see Dayco C01'POration v. FTC 362 F. 2d 180, 185-87 (6th Cir. 1966). Here, however, the defense evidence has indicated that the "facts " offcially noticed are not "established general facts " and the fewness as well as the nature of the cases apparently constituting the basis for the offcial notice, casts doubt on whether the matters are within the area of expertise. To bolster the basis for the offcial notice here taken, complaint counsel refer to a line of cases in which the Commission has established consumer preference for dealing with the prime or original source of products-cases involving the use of the term "manufacturer " or "factory" or "mills " by business entities that were neither manufacturers nor mixers. (CPF 23-24; CCH Trade Reg. Rep. , Par. 7577. ) The distinction between the terminology involved in those cases and that involved here, and FEDERAL TRADE COMMISSION DECISIOKS Findings of Fact 74 F.

also between the fact patterns in those cases and the evidentiary record here, is so plain as to need no elaboration. The evidence tending to negate the existence of this consumer preference-much of it presented by complaint counsel ' coninstead ofsists of reports indicating that most nursery stock, retailers bybeing grown by retailers, is sold at wholesale to growers; that "nurseries " selling at retail do not necessarily grow all or even a major part of the nursery products t;hey sell; and that factors other than the alleged grower status of the "nurseryman" determine the kind of outlets where the public makes its purchases. For example:

(1) The Department of Agriculture reported in 1953 that most" nursery stock "is sold at wholesale to retailers by growers and that only about "one-fourth of the farm value of horticultural specialty crops is accounted for by retail sales of crops which were grown by sellers " with the remaining three-fourths of the farm value representing "the wholesale value of these crops to the growers." (RX 85, pp. 2, 15, 55, 61, 67. (2) In the case of roses specifically, a Department of Agriculture report on the production and sale of nursery products in six selected States (including California) shows that 92 percent of all production of roses in those states .in 1963 was sold at the wholesale level. The corresponding figure for 1962 was 97 percent. (RX 83, Table 6, p. 10; see also Conklin 1749- , 1763-67; Burks 1350, 1356.

(3) A New York study published in 1959 reported that more than one-half of the retailers of nursery stock purchased all of the nursery stock that they sold and that practically all of the retailers depended upon growers for some part of their needs. It was further reported that out-of-state growers were a major factor in supplying New York's retail nursery outlets. (RX 86 pp. 7 , 19. ) This report also .indicates that nursery plant growers have not generally been in the retail business. (RX 86, p. 1.) The reports in evidence not only suggest that many-probably most- nurseries" selling at retail do not grow any substantial part of the products they sell, but they also indicate the absence of any public image of the "nurseryman" as a g-rower and a corresponding absence of any public preference for dealing with nurseries that do grow the products they sell. tl Technically. of course, the rebuttal evidence of the Government was presented for consideration only if the examiner ruled that the "offcial notice" had been overcome by defense evidence. However, to disregard it would be to sac)'ifice substance for form. At any rate, fur purposes of this discussion of the subjec.t, the examincl' has considered all the )"elevant evidence without regard to the question when 01' by whom it was offered. LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact Studies published by a research institute affliated with the American Association of Nurserymen confirm the indications in these Government reports that the retaij sale of nursery products is largely a resale operation. One such study flatly states: Most retail nurserymen purchase the material they sell with a trend to more retailers receiving plants from very long distances. (CX 41 , p. 11.) The same report also points out that "Movement of nursery stock of the large-volume production firms and heavy producing regions of the country will continue at an increasing rate to distant populated markets. Growers outside a marketing area are now a major source of nursery stock for fuD-time retailers. (CX 41, p. 14; see also p. 1.) Moreover, these studies reflect "general confusion in the minds of homeowners as to what a ' nurseryman' really is. " (CX 40 p. 8) A survey showed that the nurseryman was thought to be- A plant" grower by 73 percent.

A plant salesman by 62 percent.

A landscaper by 53 percent.

A garden center operator by 38 percent. A gardener by 31 percent.

A florist by 11 percent.

A field hand by 10 percent.

(CX 40, p. 8; CX 41, p. 7.

The Government's evidence further indicated that the public indiscriminately lumps together wholesalers, landscaper(sJ, garden center operators, managers of sales yards and agents, all as 'nurserymen.''' (CX 40 , p. 8; CX 41 , p. 7. ) Another survey makes clear that factors other than the alleged grower status of the nurseryman are significant in consumer attitudes. (CX 40 In Jisting factors determinative of the point of purchase (CX , pp. 5 , 7-8), the report fails to mention the growth of the products by the seller. Similarly, a list of the four major factors reportedly involved in consumer preference for buying at a garden center or retail nursery (RX 41 , p. 8) did not include the alleged grower status of the nursery.

Although suitable acreage is emphasized for the wholesale nursery, this is a factor unmentioned in connection with the 7 Understandably, both parties find comfort in this breakdown. Complaint coum;cJ refer only to the sbowing that 73 percent thought a nurse:ryman to be a plant grower, while respondents point out "that a nursery is regarded by the overwhelming majority of purchasers merely as a 'plant salesman.''' (CPF 27; RPF 9.

Findings of Fact 74 F.

retail nursery. The retail nurseryman is merely told to locate close to large population centers. " (CX 41, p. 8. It is significant also that CX 40 and CX 41, in recommending various courses of action to nurserymen, fail to recommend any specific emphasis on the nurseryman as the grower of the products he sells, except perhaps for the recommendation that shrubs should be planted around the sales area. (CX 40, pp. 8-10; CX 41 17.

It is thus apparent that the studies by the Horticultural Research Institute, Inc. (CX 40 and ex 41) do not constitute reliable, probative, and substantial evidence of the alleged preference. First, they provide no proof of a public understanding that "nurseries" grow all or a substantial part of the products they sell. Second, these studies do not reflect any public preference based on such a belief. Instead, as we have noted, they indicate the contrary. Similarly, the testimony of a consumer psychologist tends to negate the existence of both the public understanding and the public preference alleged. (Queen 2513-16. The primary factor emphasized by these studies is the view that nurserymen are good sources for information and advice on plants and planting and also for landscaping and planting services. (CX 40 , pp. 2 , 7. ) But to the extent that the public may prefer to deal personally with a nurscry because of a desire to obtain "reliable information on plants and planting" (CX 40, Par. , p. 7; CPF 27; Tr. 2628- , 2456-57), this is a factor that a consumer dealing with a mail-order house has necessarily disregarded. Similarly, a mail-order purchaser does not expect the mail-order seller to do the planting for him. (Compare CX 40 Par. 15, p. 7; CPF 27.

CX 39 provides some support for the contention that there is a favorable public attitude toward "nurseries " but it does not show that a "nursery" necessarily grows all or any substantial part of the products that it sells, or that the public has such an understanding.' Moreover, the basis of whatever preference there might be is not shown to bear any relationship to a public belief that nurseries grow the products they sell. Essentially, the preference reported in CX 39 relates to nurseries vis-a-vis chainstores, but with some references to mail-order sales. (CX 39, pp. 3 , 6- 33-35. ) This study-like CXs 40 and 41-also suggests that factors The l"eport states that it was " diffcult" for the consumers Questioned "to differentiate Qcclu' ately among nursery garden centers, chainswre garden centers, independent "order centers nlJrseries, and roadside stands. " (CX 39 , Table 2 (footnote), p. 6. LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact other than a "grower image" are involved in consumer attitudes and in the actualities of the distribution of nursery product sales through various channels. (CX 39, pp. 3- In any event, the figures in CX 39 regarding retail distribution of nursery products, particularly roses, must be assessed in the light of evidence showing that substantial quantities of nursery products sold at retail by nurseries and other retail outlets are not grown by the retailer.

Government counsel suggest that to overcome the offcial notice respondents should have established the facts regarding consumer preference through a sampling of representative consumer attitudes from consumers themselves (CPF 25), but it is significant that neither the offcial notice relied on nor the evidence offered in rebuttal was based on any survey of relevant consumer preference.

Moreover, complaint counsel finally adopt a position inconsistent with the offcial notice taken in the complaint by referring to a "preference on the part of members of the purchasing public for dealing directly with nurseries which actually grow or cultivate some of the stock they offer for sale rather than obtaining that nursery stock from a middleman or other intermediary. (CPF 28-29; emphasis added; see Tr. 2628-31.) They do not explain why such a nursery would not be "a middleman or other intermediary" as to that part of the stock which it does not actually grow or cultivate, In summary, with offcial notice having been rebutted, the examiner finds that a preponderance of the reliable, probative and substantial evidence in the record does not support the allegations of Paragraph Seven of the complaint that there exists a preference on the part of members of the purchasing public for dealing directly with nurseries and growers of nursery products rather than with retailers, dealers or other intermediaries. C. Respondents' Involvement in the Nursery Business Since the examiner has found that respondents did not represent themselves as growers (as alleged in Paragraph Five the complaint) and that in any event there has been failure of proof as to the materiality of such a representation based on an alleged preference on the part of the public for dealing directly with nurseries and growers (as alleged in Paragraph Seven of the complaint), he deems it unnecessary to make detailed findings concerning the allegations of Paragraph Six of the complaint to the effect that respondents do not actually grow or propagate , Findings of Fact 74 F.

the nursery products they sell or own any land on which such products are grown. However, against the possibility that the Commission, on appeal or review, might reach a different conclusion respecting the allegations of Paragraphs Five and Seven it may be desirable to make attenuated findings of fact respecting the allegations of Paragraph Six.

Through testimony and other evidence, and also through admissions by respondents and their counsel, the record clearly establishes that, as alleged in Paragraph Six of the complaint respondents do not actually grow or propagate the nursery products which they offer for sale and sell" Similarly, the record clearly establishes that they do not "own" or "operate" the nurseries, farms, or properties where such products are grown or propagated. The only real issue is whether respondents "control" such nurseries, farms, or properties. Although Lakeland does not own or operate a "nursery, " the record establishes that it is in the nursery business and is not as the Government contends, simply "an elaborate mail-drop operated by artful advertising copywriters." (CPF 22. ) To call Lakeland a "sales outlet many times removed from the actual grower" (CPF 22) is to indulge in the hyperbole that Government counsel condemn in respondents.

Lakeland itself does not own or lease any land on which the products it sells ar" grown, but it has maintained a significant connection with and control over the propagation, development growing, packing, shipping, handling, and distribution of nursery stock. Lakeland's connection with and control over these phases of nursery operations stem primarily from its relationship with Andrews Nursery Company, Faribault, Minnesota. Although the exact legal relationship between the parties was never clearly defined, the uncontradicted evidence indicates that for all practical purposes Lakeland has been, andis, engaged in a partnership or joint venture with Andrews. About 25 percent of the nursery stock sold by Lakeland is grown on acreage owned or controlled by Andrews; the remaining 75 percent is grown on a contract basis on acreage exclusively allocated to Lakeland, either in its own name or in the name of Andrews on behalf of Lakeland. Moreover, a significant part of the nursery products sold by Lakeland is propagated from bud wood that is owned or controlled by Lakeland.

Government counsel recognize that the uncontradicted testimony in the record shows the existence of an understanding on the part of grower-suppliers that the nursery products pur- LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact chased by Andrews were grown for Lakeland; but in an impermissible effort to shift the burden of proof, Government counsel complain that respondents "failed to Introduce any documentary evidence" to corroborate that understanding. (CPF 15. ActuaUy, the joint nature of the Lakeland-Andrews operation has and the ab-been documented (for example, RXs 16- , 38-40), sence of other documents has been explained. Contracts and other records relating to transactions between Co-Operative Rose Growers, Inc., of Tyler, Texas, and Lakeland-Andrews apparently had been destroyed in a fire. (Burks 1383. ) Contrary to the argument of complaint counsel (CPF 15), there is no "inescapable conclusion" that the business realities were different from the picture painted by respondents and their suppliers. The examiner does not mean to find or to suggest that Lakeland is entitled to call itself a nursery. It may weU be that the degree of control Lakeland exercises over the production of the nursery products it sells is not of such a nature as to justify this representation. (Compare RPF 7 , 14 , 27.) But this is not the issue, and the cases relied on by complaint counsel relating to the use of the terms " mill" and "factory" and " manufacturer (CPF 18- , 23-24) are inapposite.

Similarly, the fact that the control exercised over the growing fields by respondents, either directly or through Andrews, is not absolute, does not resolve the question whether it is deceptive for Lakeland to call itself a Nurseries Sales corporation. Likewise, the point at which Lakeland obtains title to the nursery products is not dispositive of this question. (See CPF 15-17. The essential facts regarding respondents' business status and operations may be derived from the record as follows: Andrews 1100-36, 1139-1208, 1225- , 1244 1249- 1284-1327; Hoffman 2167- , 2197-2201; Burks 1339- , 1346- , 1356- , 1383- 1404- , 1409- , 2434-36; Conklin 1752-53, 1757- , 1760- 1767-86; Levy 1734- , 1741; stipulation, Tr. 1743-47; CXs 10; RXs 16-23, 28-35, 38-40.

In summary, the examiner finds that the allegations of the first subparagraph of Paragraph Six are supported by the evidentiary record, except that respondents do exercise a degree of "control" over the propagation and growing of the products they sell, such control being less than absolute. However, the facts respecting respondents' business operations do not support the further allegation that respondents' representations regarding their business status are false, misleading, or deceptive. , Findings of Fact 74 F.

III. Representations Regarding Plant Characteristics Paragraphs Eight, Nine, and Ten of the complaint challenge representations respecting the amount and size of blossoms, the duration of the blooming period, and other blooming characteristics, as well as the rate of growth, the appearance, the height the size, and other physical characteristics of (1) the Nearly Wild rose, (2) the Ray Bunge Scarlet Showers rose, (3) the Wilson Climbing Doctor rose, (4) chrysanthemums known as Fragramums, and (5) chrysanthemums known as Azaleamums. According to Paragraph Nine, respondents represented that al1 purchasers. . . would obtain or could obtain " specified results from each of these plants "in the first season it is planted whereas, according to Paragraph Ten many purchasers. . . could not obtain the results" advertised.' The allegations and the evidence as to each of these plants wi1 be considered separately.

A. Nearly Wild Rose Paragraph Eight (A) of the complaint cities excerpts from Lakeland' s direct mail advertising for the Nearly Wild rose (CXs 4 B-C), and these are the "typical" representations relied on by complaint counsel in their proposed findings (CPF 29-30). According to the Government, this advertising represented that a Nearly Wild rose plant would produce the following results in the first season that it was planted:

(1) 1 000 to 4 076 blossoms.

(2) A "majority" of blossoms 3 inches in diameter. (3) Continuous blooming from June to November. (4) Blossoms that resemble those pictured in the advertising. (5) 30 to 50 blossoms in a single day. (Complaint, Par. Nine (A); CPF 34.

Paragraph Ten of the complaint alleges that "many purchasers . . . could not obtain" these results.

Of the five representations challenged, the only dispute of any substance relates to the two claims regarding the number of blossoms. And since the Government concedes, as it must in the light of the evidence (Dowd 517- 569- 573 600- 613-14; 9 Compare Paragraph Ten of the amended complaint with Paragraph Ten of the abortive complaint issued in Docket 8570. In the amended complaint the allegation is that "many purchasers. . . could not obtain the adver1.ised results for any of the five plants spedfied, whereas the complaint in Docket 8670 alleged that " many purchasers. . . did not obtain" the advertised results for four of the plants in Question. (Emphasis added. ) It was only as to the Fragramum that the complaint inDockct 8670 alleged that the advertised results "could not" be obtained.

LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact RX 3 A D; Brownell 2048), that one Nearly Wild rose plant did produce 30 to 50 blossoms in a single day and as many as 076 in a single season, this dispute centers simply on the question whether respondents represented these results as achievable in the first season after planting, Neither in the complaint (Par. Eight (A)) nor in the proposed is there anyfindings of Government counsel (CPF 29- , 36-37) showing of specific language in Lakeland advertising that promises the achievement of specific bloom count in the first growing season, The only representations that specify first-season results this season" andsimply guarantee that each plant will "bloom wi1 "produce heavy masses of bloom beginning this J une hundreds upon hundreds" of roses. The advertising specifies that "with 12 rose plants " the purchaser might expect "thousands " of roses during "the first season alone. " Other claims regarding "thousands" of blossoms refer to a time after plants become fully established." (See CX 4 B; see also CX 4 C, p. 2, and Dowd 542 563- 610-12.

The theory of complaint counsel is that the alleged misrepresentation concerning first-season blooming arises from respondents' failure to reveal that the advertised results were achieved during the second growing season. For example, referring to the admittedly true representation that in a test conducted at an agricultural college, the Nearly Wild produced 4 076 roses from a single plant, Government counsel complain that the respondents never qualified the claim in any manner in their brochure so as to disclose that these results were obtained (1) during the second growing season. . , , " (CPF 36, 45; Tr. 512-25. Similarly, after citing other representations, Government counsel state that none of these claims "were ever qualified anywhere in the brochure (CX 4 B) to the effect that a purchaser could not expect to achieve these results for at least two years. . . . (CPF 37.

Even under the "Danish Pastry Test" espoused by Governinference tooment counsel (CPF 41), it would be stretching far to find that merely because of a faHure to reveal the season in which the advertised results may be expected, purchasers of nursery stock would expect to accomplish in the first growing season the profuse results pictured or described in this or any simHar advertising.

What complaint counsel call the "Danish Pastry Test" is derived from the case of Heinz W. Kite/met Docket 8538, Final Order November 7, 1963 (Opinion, p. 3) (63 F. C. 1282, 1290J Findings of Fact 74 F.

(aff' on other grounds 337 F. 2d 751 (9th Cir. 1964)). According to complaint counsel, the Kirchner case delineates "the outer limits of consumer gullibility within the mantle of the Commission s protection. " It "would exclude from the Commission consumer protection functions, any person whose intelligence level is so low as to believe that baked goods advertised as Danish Pastry (weren baked in Denmark." (CPF 41.) In the words of the Ki1' chner case (Opinion, p. 3) (63 F. C. at 1290J, it would be applying "uncritically" or pushing "to an absurd extreme" the Commission s duty to the "gullible and credulous" to charge Lakeland with liability, not for any affirmative representation, but for a supposed inference drawn from silence. This would be "outlandish " involving protection only of "the foolish or feeble-minded.

Exaggeration or "puffng" in seed catalogues and in related nursery products advertising has been a part of Americana for so long that it may properly be a subject for offcial notice. This record affords no basis for a finding that in the absence of a specific disclaimer, the ordinary purchaser of seeds or of nursery stock expects his garden or his yard to produce in the first growing season the lavish growth, blooms, or fruit depicted by photographs or by words in catalogues and advertising for nursery stock or for seeds. (See RPF 92- , 49-50; Queen 2485- 2491- , 2531- , 2539- , 2544-45; Malins 884-85; compare iorey 1666.

Thus, regarding the bloom count for the Nearly Wild rose, the evidence fails to show that respondents represented directly or by implication that the number of blossoms specified in the challenged advertising (up to 50 a day or a total of more than 000) might be expected in the first season after planting. Moreover, against the opinion testimony of the Government' expert that such prolific first-season blooming is unlikely (Dowd 515- , 613-14), there is defense testimony that such results are achievable in the first season after planting. (Brownell 2048 2087-88. ) And note that the Government's Witness doubted only that a daily bloom rate of 30 to 50 blooms could be "sustained. (Dowd 613.

As to the other three representations questioned, the examiner makes findings as follows:

(1) The evidence establishes that the Nearly Wild produces blossoms 3 inches in diameter, although there may be some question whether a "majority" of them would attain such size. (Dowd 543, 608-09; Brownell 2044- , 2047, 2074. ) Again , LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact however, Government counsel fail d to demonstrate any substantial basis for the allegation that respondents represented that a "majority" of the blossoms would be that size. (Tr. 542. (2) The Government has apparently conceded sub silentio the validity of the advertising claims respecting continuous blooming from June to November. (CPF 43-49. ) At any rate, the evidence substantiates that such continuous blooming may expected except in areas where frost occurs before November. (Dowd 560- , 571- , 606; ErowneIl2046- , 2091-92. (3) The Nearly Wjjd rose plant has produced blossoms that resemble" those pictured in the advertising. Regarding this question of alleged pictorial misrepresentation some reference was made to the "exaggerated" size of the blossoms pictured in the close-up photograph in CX 4 E (and of the flowers and leaves in the bouquet held by the lady pictured on the. reverse of CX 4 E), but the Government's case on this aspect of the advertising ultimately emerged as involving a discrepancy between the color of the rose as shown in the advertising and the actual color of the rose. (CPF 47-48. ) The complaint' s challenge involved only "the close-up photo " in the advertising brochure. (Complaint, Par. Nine (A) (4) ; CX 4 E. The roses shown in this photograph are within the 3-inch dimensions conceded to be achievable. (Dowd 543. ) Testimony regarding other photographs in the brochure (Dowd 548) is of dubious relevance (see Tr. 544-47), and in any event, it does not prove the allegation here in issue.

As far as color is concerned, the record leaves no doubt that the photograph "resembled" the actual blossoms, and the fact that the colors may not have been identical is hardly a material misrepresentation. Whatever the difference may be between "rose-pink" and "cherry-pink " and however troublesome this difference may be to an expert, the examiner cannot find the color discrepancy to be a material misrepresentation as far as the ordinary purchaser is concerned, particularly when consideration is given to the obvious diffculties of true color reproduction in printing advertising brochures. (Dowd 548- 553- , 577- , 614- , 618-19; Erownell 2035- , 2073- 2088- , 2096; Malins 886-88; CXs 4 E, 42 A-E; RXs 4 , 5 , 6, 66-69.

Specifically, the examiner finds that the Nearly Wild rose produced blossoms that, in the words of the complaint resemble (dJ those shown in the close-up photo in the brochure advertising the Nearly Wild Rose. " (Complaint, Par. Nine (A) Findings of Fact 74 F. T. (4). ) Thus, the examiner finds no material misrepresentation in the color depiction of the Nearly Wild rose. On the basis of the specific representations cited, as well as the advertising of the Nearly Wild rose (CX 4 B-C) in its entirety, the examiner finds that the allegations of misrepresentation concerning this plant are not supported by the reliable probative, and substantial evidence in the record. These allegations are accordingly dismissed.

B. Ray Bunge Scarlet Showers Rose Paragraph Eight (B) of the complaint contains excerpts from respondents' advertising for the Ray Bunge Scarlet Showers rose 10 (CX 5 B-C), and the Government contends that this advertising represented that during the first growing season this plant- (1) would grow 18 inches in height in a single week, and 20 feet in height and 40 feet in width during the season; (2) would produce blossoms the majority of which would be 5 inches in diameter;

(3) would show repeat blooming in each month from June to October;

(4) would produce at least 300 blossoms; and (5) would produce the advertised results with only 3 hours of sunlight a day. (Complaint, Par. Nine (B); CPF 30- , 35 37-38.

As in the case of the Nearly Wild rose (supra pp. 33 , 34), the record does not support the charge that respondents represented that al1 these growth and blossoming characteristics were achievable during the first growing season. One sales letter (CX 5 C) did make the specific claim that the Scarlet Showers would soar 20 feet in height and spread 40 feet in width in the first growing season. But this specific claim is not automatical1y referrable to the other growing characteristics advertised, particularly those made in the brochure (CX 5 B). Moreover, there is evidence that the circulation of this letter (CX 5 C) was limited and that before Commission inquiry, this dubious claim was corrected in a later sales letter. (Hoffman 2187- , 2215- 2243-47; Harriet Cohen 198; CX 2 B.) In any event, as far as the other advertising claims for this rose are concerned, the question of the timing of the advertised results (whether achievable in the first season or in a subsequent season) is incidental and basically immaterial.

JG This plant may be l'cfenedto fis the Ray Bunge rose or as the SClirJet Showers 1'05('. ). ), LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact In the case of the Ray Bunge rose, the dispute centers not so much on the meaning of the advertising as on the question whether the Government has proved that the advertising is deceptive because "many purchasers" could not obtain the advertised results. (Complaint, Par. Ten.

The Government's case against the advertising of the Scarlet Showers rose is based on the test growing of three plants. When we consider the number of plants sold and the obvious variations and vicissitudes involved in growing any plant, three plants would, at best, be a small sampling on which to base a finding that "many purchasers. . . could not" achieve the results in question. (Compare Malins 838- , 856-57; Morey 1499-1500. Even if the Government's evidence regarding the test growing of these plants were accepted at face value, there would remain at least some doubt that this evidence of failure to achieve the advertised growth and blooming characteristics was representative of the experience of "many purchasers." There would remain some doubt that "many purchasers" would be as unsuccessful in obtaining the advertised results as Peter Malins, the rosarian of the Brooklyn Botanic Garden (Tr. 784 et seq. and Dr. Dennison Morey," former West Coast research director for Jackson & Perkins Nursery (Tr. 1467 et seq. Be that as it may, the fact is that the Government's evidence relating to the so-called tests of the Ray Bunge rose is not entitled to full credence. In view of a variety of troublesome circumstances these tests cannot be relied on to support the inferences and generalizations that complaint counsel urge. Although there can be no question concerning the qualifications the sincerity, and the good faith of Peter Malins, the test of the Ray Bunge rose that he conducted at the Brooklyn Botanic Garden is suspect because of (1) the faulty handling of the test plant; (2) the failure to follow respondents' directions for preparation and planting; and (3) the failure to maintain detailed written records.

Technically, the evidence fails to establish through a "chain of delivery" the identity of the plants submitted by respondents with those tested, but the circumstantial evidence leaves no real doubt on this score. More serious questions arise, however, concerning the handling of the plants between their receipt by Commission representatives and their planting in Brooklyn. Documentary evidence establishes that Lakeland delivered to 11 ame misspelled as Morley in t)"anscript. FEDERAL TRADE COMMISSIO!\ DECISIONS Findings of Fact 74 F.

the New York offce of the Federal Trade Commission, on or about April 16, 1963, one sample of the Scarlet Showers and one sample of Wilson s Climbing Doctor. (CXs 31 , 32. ) There is no reliable evidence concerning the manner of delivery, the person who delivered them, or the manner of their packaging when received." The investigating attorney, Morton P. Cohen,!" found them on his desk, possibly on April 16 or 17, the package having presumably been delivered in his absence to the attorney in charge. (Tr. 433, 444-45. ) This fact was developed after the investigator first indicated that the plants had been delivered personally to him by one of respondents' counsel, this answer then being changed to identify respondent Chester Carity as having made delivery to him. (Tr. 429, 434, 440 , 442 , 444. ) When the investigator first saw the rose plants, they were in plastic bags with a tag affxed to each and with planting instructions enclosed. (Tr. 431 , 435 , 452, 460-61. ) The record indicates that these instructions were received and marked by the investigator on April 17 , 1963, but he did not tag the plants. (Tr. 433- 437- , 457-58. ) The planting instructions were extracted from the plastic bags, possibly at the Commission s offce or perhaps at the time of delivery to the Brooklyn Botanic Garden. (Tr. 438-39. ) The plants were shown to several people and possibly handled by them. They may have been moved from place to place within the offce. They remained in the offce at least overnight. (Tr. 445-47. ) Lakeland's instructions are to store the plants in a cool place, preferably a refrigerator. (CXs 3 A- The plants were taken on the following afternoon to the Brooklyn Botanic Garden and delivered to the rosarian, Peter :l1alins. The investigator had no personal knowledge of the manner in which Mr. Malins . handled the plants or when or how he planted them. The investigator believed he opened the plastic bags in :lr. Malins' presence and extracted the planting instructions. (Tr. 450-52. ) He did not leave the planting instructions with Mr. Cl1alins or even bring them to his attention. (Tr. 439- , 451 , 464. ) He merely asked Mr. Malins to plant the roses " in the way that he would plant any of his other roses. . . . " (Tr. 463; see Malins 899. As a witness, the investigating attorney apparently testified wholly from memory concerning events that took place four Note also that the Govel"f1rnent reli s or. assumptions as to the point of hipment of the plants and the manner of theil. packaging- for shipment. (CPF 52- 53. ) There is neither evidence nor assumption as to when they were shipped 01" when they WE're received in :Kew York by J'!"pon.dents or their coun eJ.

J:' Mr. Cohen left the Commission s employ in 1865. ('11" 425 456. LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact years previously. He could do no more than recall vaguely the name of one of the plants. He first identified it as "the Climbing Reverend Bunge " but ultimately named the "Climbing Doctor " which he stil erroneously connected with the Rev. Mr. Bunge. (Tr. 426- , 458- , 462.

Several other discrepancies are troublesome. In contrast to the investigator s testimony regarding the packaging and tagging of the rose plants (supra p. 38), Mr. MaJins testified that when the plants were delivered to him, they were not properly packaged they were simply wrapped in newspaperand bore no labels. (Tr. 789- , 794- , 808- , 847, 898-99. Although Mr. Malins testified that he labeled these plants in accordance with the information given to him, the record does not establish the basis on which the investigating attorney had distinguished between the two plants. (Malins 790, 847; Morton Cohen 458-59. ) Mr. Malins gave conflicting testimony regarding the basis for his identification of the plants after they bloomed. (Tr. 805- , 833, 845- , 857-59.

Mr. Malins first testified that he planted the test plants within an hour after delivery, but he later testified that he soaked them in water for two or perhaps three hours. (Tr. 790- , 809 854. ) Lakeland' s instructions prescribe that the root area should be soaked from 12 to 24 hours. (CXs 3 A-B; see also Morey 1670-71.) Mr. Malins' standard procedure was to soak the roots for an hour, but he extended the soaking period for these plants because the roots looked dry. And he planted them quicJdy because he realized there might be problems. (Tr. 791 , 80 10. ) Mr. Malins also put fertilizer in the planting holes even though he recognized that this was not recommended. (Tr. 792; CXs 3 A- Despite Mr. Malins' testimony that there was no root damage suffcient to account for the poor showing made by the Ray Bunge rose he planted (Tr. 794- , 812- , 817 , 840- , 854 862- , 899-901), he did acknowledge that the roots were dried out and that this could create problems. (Tr. 792, 809- , 817 866 , 872. ) Mr. MaJins' testimony minimizing the effect of root dryness if a plant survived was essentially corroborated by Dr. Morey (Tr. 1530- , 1670-76), but the record contains countervailing testimony. (Andrews 1213- , 1283 , 1316-17; Burks 2401-09.

Mr. Malins testifi,ed from memory. Although he had maintained some apparently sketchy records regarding the test plants he did not bring them to the hearing. He had "no special records" for these plants-not even the date they were planted. Findings of Fact 74 F.

(Tr. 817- , 830-31. ) Contrast these test procedures with Mr. Malins' procedures for tests on behalf of Jack on & Perkins and other nurseries. (Tr. 834, 836.

The assumptions of fact underlying some of Mr. Malins' testimony respecting the condition of the test plants when he received them, proved to be unfounded. (See, for example, Tr. 863, 867- 873.

Although there may be some doubt whether (1) the treatment of the plants before delivery to Mr. Malins, (2) the consequent drying of the roots, and (3) the failure to follow Lakeland' instructions, especially those relating to preplanting soaking, account for the poor results he reported, these circumstances are nevertheless suffcient to discredit Mr. Malins' test as a fair or reasonable basis for a finding that respondents' advertising of the Ray Bunge Scarlet Showers rose was false, deceptive, and misleading.

Mr. Malins conceded that there might have been something wrong with the plants from the start. (Tr. 799, 807- , 815- 857, 866.) He did suggest that the diffculty might have been an inherent genetic weakness (Tr. 814 , 864-65), but this subject was not further developed, except for a similar speculative comment by Dr. Morey (Tr. 1675-76) ; and the record thus affords no basis for a finding along any such line as that. Whatever the reasons might have been for the shortcomings of the Scarlet Showers plant Mr. Malins grew " the examiner s ultimate finding is that the evidence simply does not permit a finding that the results achieved by Mr. Malins are representative of the experience of "many purchasers " of that rose variety. (See Tr. 857, 861.) Similarly, the test of the Ray Bunge rose plants by Lakeland' competitor, Jackson & Perkins, does not constitute reliable probative, or substantial evidence of the falsity of respondents advertising claims for this rose. The reasons for this conclusion are many.

A test conducted by a competitor must be cautiously viewed under any circumstances. Here, the record supports a finding that the president of Jackson & Perkins (who was "particularly interested" and "anxious" about the report on this rose) harbored animosity toward Lakeland and its president, Henry Hoffman. (Morey 1486, 1569- , 1625- , 1644-53; Hoffman 2212. H The examiner finds no substantial basis for respondents' suggestion that drought conditions in New York may hase adversely affected the plants in the relevant time period. (RPF 48; see Malins 793, 810-12, 854-55.

LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact There is evidence also that Jackson & Perkins had un successfully sought the rights to selJ the Ray Bunge rose and that the president of Jackson & Perkins was disappointed that the commercial rights had been assigned instead to Lakeland. (RX 81 B; Morey 1573, 1645. ) The plants that were the subject of testing were obtained through the Rev. Mr. Bunge on the representation that they were to be used "strictly for hybridizing purposes. (RX 81 B.) The Government's principal witness, Dr. Morey, testified only from memory concerning events and observations of eight to ten years ago, and his memory was so demonstrably poor that his testimony may properly be accorded litle weight. For the hearing examiner to rely on such an uncertain memory for crucial test results is unthinkable.

Dr. Morey first testified positively-not once but several times and even after a suggestion that he might be mistaken-that he had received and had planted two Ray Bunge rose plants for testing purposes in 1959 (or 1960), but other evidence establishes that the time was late 1957 or early 1958. (Tr. 1483, 1570 1604, 1641- , 1700- , 1716-17; CXs 22- , 30; RXs 46 A- 81 A-B; Andrews 2317-21. ) His memory was likewise faulty as to the year in which two photographs of the plants (CXs 11, 12) were taken. He stated that the pictures were taken in 1962 (Tr. 1490, 1640), but a handwritten legend on the back of each states: "Ray Bunge 1963-Planted 1959.

Dr. Morey s attempt to relate the time of planting the test plants to the time when he first saw Lakeland's advertising for the Scarlet Showers (eX 5 B) adds to the confusion instead of clarifying the matter. He indicated the interval was brief, but Lakeland did not circulate any advertising for the Scarlet Showers unti December 1959. (Morey 1624- , 1648, 1699-1703, 1716- 17; Hoffman 2176-77; see Andrews 2322-23; Burks 2385-86. More significantly, Dr. Morey testified in detail as to his personal receipt of the plants in good condition, but a contemporaneous letter over his signature contradicts this testimony. The letter indicates rather plainly that the plants had been mislaid in the Jackson & Perkins warehouse, that they were not in "very good" condition, and that they were not planted for a considerable time after they had been shipped. (Tr. 1483- , 1688-91; CXs 23, 30. Moreover, there is evidence that the plants in question were not comparable to the plants sold commercially by the respondents. (Andrews 2317- , 2327-45; Burks 2382- , 2410- , 2425- 27; compare Morey 1485- , 1565, 1703. Findings of Fact 74 F.

The plants were subjected to procedures that cast doubt on the validity of the test results, despite the protestations of Dr. Morey that the attempted hybridization, etc., would have had no effect on the growth and other characteristics of the plants in question. (Tr. 1605- , 1617; see also CXs 23, 25; RX 81 B.) The record even leaves some doubt as to where the plants were grown. (Morey 1483, 1486- , 1595, 1608; CXs 24-25; Warriner 664; Lunay 1923, 1959-60; CPF 57, n. 2, The selective destruction of the Jackson & Perkins documents relating to the tests Jikewise arouses doubts that cannot be ignored. And the testimony of the records custodian for Jackson & Perkins (Mrs. Mae Lunay) was of such a nature as to intensify rather than to dispel these doubts. (Tr. 1932, 1943-2023, 2097- 2121; see Tr. 1859-70.

The testimony of William A. Warriner, the present director of research for Jackson & Perkins, does nothing to shore up the Morey testimony. Among other things, Mr. Warriner expressed the opinion that when he observed the plants during the summers of 1963 and 1964, they were " at least a year old, possibly two. " (Tr. 668.) Actually, the plants were at least five years old in 1963 (supra p. 41).

Mr. Warriner did not make any special observation of these plants. He did not actually count the blooms. He made no measurements. He may have made notes, but he did not have them. His testimony regarding the number of blossoms was an estimate-a guess to the best of his recollection as to what he thought the plants had produced during the period he observed them. He acknowledged in effect that the observations about which he testified were not in line with good test procedures. (Tr. 734-38. Government counsel contend in effect that despite the questions raised concerning the test plantings, the expert opinions of Mr. Malins, Dr. Morey, and Mr. Warriner concerning the challenged advertising claims are suffcient to sustain the allegations of the complaint. (CPF 61-62. ) However, their opinion testimony was so clearly based on their experience with the test plants that it is discredited to the degree that the tests are so suspect that this experience is not necessarily representative. (MaJins 833; Morey 1709; Warriner 662, 664, 684, 686, 734. Conversely, despite the possibility of some pro-Lakeland bias on the part of Mr. Andrews and Mr. Burks because of their business relationships with respondents, there is no basis for rejecting or drastically discounting their testimony. (Compare CPF 62. ) Their credibility was not impeached, and their testimony LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact has been given appropriate weight in the light of the whole record.

In view of the examiner s rejection of the Malins and Jackson & Perkins "tests " as a valid basis for the opinions stated, he deems .it unnecessary to make findings regarding the observations of the testers that conflict with respondents' advertising representations. It is worth noting, however, that Government counsel again have abandoned sub silentio one of the charges. They propose no finding respecting the alleged falsity of the claim of 5-inch blossoms (Complaint, Par. Nine (B) (2)), the evidence having established the essential validity of this representation. (CPF 58-65; Malins 860; Warriner 739; Andrews 2313; Burks 2390; RX 7.

When the shortcomings of the tests relied on by the Government are considered in the light of respondents' evidence (Andrews 2281- , 2288- , 2313- , 2353- , 2375-77; RXs 41A; 73- , 104A , 108A; Burks 2382, 2389-2401 , 2427-28), the conclusion is inescapable, in the examiner s opinion, that the Government has not proved by a preponderance of the reliable, probative, and substantial evidence in the record that respondents' advertising of the Ray Bunge Scarlet Showers rose was false, misleading, or deceptive. Some of the advertising claims may be questionable, but this record requires a Scotch verdict- not proved. " It should be apparent also that the examiner s findings regarding the Scarlet Showers have been influenced by considerations of fairness (and the appearance of fairness). Fairness precludes a different verdict that would have had to rely in major part on "tests " of dubious validity. See Evis Manufacturing Co. v. Federal Trade Carnmission 287 F. 2d 831 , 836- , 847- (9th Cir . 1961), cert. denied 368 U. S. 824; Via bin Corp. Docket 8579, Order Dismissing Complaint, September 16, 1964. C. Wilson s Climbing Doctor' Rose Concerning the Wilson s Climbing Doctor rose plant, the complaint challenges representations that during the first scason it is planted, (1) it wil attain a growth of 11 feet in height; (2) the majority of its blossoms wil be 6 to 8 inches in diameter; and (3) it wil produce continuous blooming from June to October. (Complaint, Par. Nine (C).

The only representation concerning which the first-season aspect is material is the claim as to the 11-foot height of the plant. Again, there is no direct representation that this height is Findings of Fact 74 F.

achievable in the first season after planting, and the Government relies on respondents ' failure to affrmatively reveal that such growth may be expected only after the plant is well-established. (CPF 38. ) This theory is as dubious with respect to the Climbing Doctor as it was with respect to the Nearly Wild rose (supm pp. 33, 34), and it is rejected.

Without saying so, Government counsel have apparently abandoned the charge as to the falsity of the representation that Wilson s Climbing Doctor rose would produce blooms measuring 6 to 8 inches in diameter. (CPF 66. ) Their own witness testified that the plant he grew produced 8-inch blossoms,' (Malins 806. The Government's only evidence respecting the remaining questions-the height and blooming period of the Wilson s Climbing Doctor rose-is based entirely on the Brooklyn Botanic Garden test of one plant. The examiner finds that this test suffers from the same infirmities as that involving the Scarlet Showers (supm pp. 37-40), so that the testimony of Peter Malins in this regard does not constitute reliable, probative, or substantial evidence that many purchasers" could not obtain the advertised results. any event, the claims are supported by respondents' evidence. (Andrews 2277- , 2350-51; Burks 2422-23; see RXs 102, 108A. The charges of misrepresentation relating to Wilson s Climbing Doctor rose are dismissed.

D. Fmgmmums Advertising claims for the Fragramum chrysanthemums challenged by the complaint (Par. Nine (D) and Par. Ten) are that in the first season a Fragramum was planted, it would produce: (1) 200 to 400 blossoms, with at least 1 000 blossoms each subsequent season;

(2) many blossoms 4 inches in diameter; (3) continuous blooming from August to November; and (4) fragrant blossoms.

As the evidence eventuated, the primary basis for the Government' s challenge to the Fragramum advertising was the fact 15 In an obvious typographical error, the size is shown as " 18 inches " at Tr. 806. See RPF 47 (footnote).

1G Complaint counsel had offered testimony by Wiliam A. VI'arrinel' , Director of Research for Jackson & Perkins Nursery, respecting Wilson s Climbing Doctor rose, but because of his admitted lack of familiarity with this specific rose, the examiner ruled his testimony to he irrelevant. Although the testimony is in the record as an offer of proof, it has not been considered by the examiner in making this- dedsion. (Tr. 688-72.5 LAKELAND NURSERIES SALES CORP. , ET AL. Findings of FHct that if Fragramums were grown in a yard or garden in most frost would prevent any blooming atsections of the country,17 all-the plants would freeze before they had a chance to bloom. (Ackerson 935, 940, 943-48; Parker 1854-56. Respondents' own evidence confirms the existence of this preblooming freeze problem (infra pp. 45, 46), and the only remaining questions of substance relate to whether there is proof (1) of the boundaries of the areas where Fragramums would freeze before blooming and (2) of the advertising and sale of Fragramums in such areas. (RPF 84, 91.) The examiner is convinced that there is such proof and so finds.

The Government's evidence was presented through Cornelius Ackerson, a "semi-professional" amateur gardener (Tr. 1049) and a leader ' in the National Chrysanthemum Society. (Tr. 908-11.) At the request of Dr. Slizabeth B. Parker, the originator of the Fragramums, Mr. Ackerson had test-grown Fragramums in 1960 or 1961" in his New Jersey garden and in his greenhouse, but he found that those plants left in the garden failed to bloom before frost. (Tr. 912- , 934-35. ) There are several evidentiary problems concerning the test he made (infra pp. 49 50), but, when considered in the light of the whole record, they do not vitiate Mr. Ackerson s testimony concerning the inability of the plants to bloom outdoors before frost. Mr. Ackerson, in answer to a limited question, initially testified that Fragramums planted in New Jersey, Connecticut, Massachusetts, or New York would not produce blossoms before the plants were kiJed by frost. (Tr. 943-47. ) He amplified this answer by stating that in any area which gets severe frost by November, the Fragramums could not be grown to blooming and that this would include practically the whole country with the exception of California, Florida, and possibly the Gulf Coast states. (Tr. 940, 948, 1025-27. ) He stated in substance that because of the "cultivar" classification of Fragramums, they would not be ready to bloom until December, and frost would nip them first except in the limited areas specified. (Tr. 948, 952-53, 1023- 1052; see Tr. 914, 935.

The testimony on this subject by Dr. Parker, who was a defense witness, was somewhat confusing, but it did confirm Mr. Ackerson s testimony that Fragramums grown outdoors in a 17 These were the conditions specified or implied in the a.advertising. (CX 7 E. ) No geographic limitation was state. The record contains no detailed information concerning the afea in which the advertising was circulated, but there is evidence indicating national circulation. (Andrews 1172-73.

18 See infra p. 49.

.

Findings of Fact 74 F.

northern climate" 19 proved not to bloom before frost. (Tr. 1854-56. ) The "fact sheets" in evidence concerning four varieties of Fragramums (RXs 48- , 60; Tr. 1815- , 1843) specify blooming in the Los Angeles area from October to January for three varieties and from October to May for a fourth.'o These documents also indicate that in areas other than California, the blooming period would probably be from August unti frost but Dr. Parker acknowledged that this was speculation dn her part and that August blooming was not achieved. (Tr. 1848 1855-56. ) She also accepted as reliable the expert opinion of Mr. Ackerman as to the inabilty of the plants to bloom outdoors under northern climatic conditions. " (Tr. 1849. Dr. Parker s direct examination as a defense witness was limited, and her answers were guarded. She did not state under oath (because she was not asked to) any facts respecting the blooming period or other characteristics of the Fragramum varieties except that they were fragrant. She did little more than identify various documents, including the so-called "fact sheets that had been prepared or approved by her, apparently for advertising and promotional use by respondents. (RXs 48- , 60; Tr. 1815- , 1843; RPF 89. ) But it is noteworthy that in answer to leading questions, she simply characterized these "fact sheets ason four varieties of the Fragramum as her "best opinion" to the growing characteristics of the plants. (Tr. 1816, 1843. She did not verify under oath the "facts" stated therein. Other evidence also indicates that Lakeland' s commercial exploitation of the Fragramum (RXs 18-19) was a "failure. (Parker 1851-56; RX 52 A- ) The reasons were never clearly spelled out, but the record supports an inference that the lateblooming characteristic was involved. (Tr. 1849-56. However, respondents contend that the area in which frost would prevent outdoor blooming of the Fragramum was not satisfactorily established. (RPF 84. ) Although respondents did not question Mr. Ackerson s qualifications as a chrysanthemum expert (Tr. 911; Parker 1849; RX 52 B), they (and, initially, the examiner) doubted his expertise regarding the areas where a killing frost would prevent blooming of Fragramums. (Tr. 948-49. On reflection and reconsideration, the examiner concludes that what might be called the "frost line" was a matter within Mr. Ackerson s expertise. His testimony on this subj ect not only stands uncontradicted, but it is actual1ly corroborated in large measure JO Dr. Parker never\' defined what she considered "northern, 20 Compare RXs 15 A- , 47.

LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact by Dr. Parker s testimony (supra).

Thus, Mr. Ackerson s testimony regarding climatic conditions is inherently credible despite some inconsistency on cross-examination (Tr. 1026-27), and despite the anomaly of his publication in the nationally-distributed Bulletin of the National Chrysanthemum Society,21 of an article concerning the Fragramums without any caveat concerning the limited area in which the plants could be successful1Jy grown outdoors. (Tr. 976, 1004- , 1038, 1052; RX 13 A-G; see RX 10.) Mr. Ackerson also had written to Dr. Parker that the "late blooming characteristic is a serious drawback for east coast gardeners. " (Tr. 939; emphasis added) However, this is not inconsistent with his testimony but merely incomplete.

If for these or other reasons there should be any lingering doubt about the reliability or substantiality of the testimony on this subject, it is the opinion of the examiner that it is within his judicial knowledge" that, except for California and Florida, the area in the United States that is frost-free in November and December is quite limited. In any event, such a fact is subject to offcial notice, " and the examiner does take offcial notice of United States Weather Bureau publications so indicating." For example; A map showing "Mean Date of Last 32 (F. ) Temper"ture in Spring and First 32 (F. ) Temperature in Autumn S. Department of Commerce, Environment Science Services Administration, Environment Data Service, 1966 ed. (Catalogue No. C 52.11:T 24/3). A copy of the side of the map that shows the "Mean Date of First 32' (F. ) Temperature in Autumn is attached hereto as Appendix A.

Although the Government might have proved more firmly and more specifica1Jy (by sales records, for example) the area in which Fragramums were advertised and sold, the testimony of respondent Henry Hoffman suffciently establishes that sales were made in areas where Fragramums could not be grown to the point of blooming. Mr. Hoffman testified that Fragramum sales were "Iimited" to certain zones shown on a Hardiness Zones map (RX 71), the northern boundaries of which extended through the States of Washington, Oregon, Idaho, Nevada, Utah, New Mexico, Texas, Oklahoma, Missouri, Illinois, Indiana, Ohio, West Virginia, Pennsylvania, Connecticut, Rhode Island, and Mas. sachusetts. (Tr. 2180-82. And although Kimba1J Andrews testified 21 Mr. Ackerson was clitor of the Bulletin. (Tr. 908. 22 See footnoted supra, p. 24. Concededly, the better practice would have been to take such offcial notice in the course of trial, hut even so, respondents arr not barred from seeking "to show the contrary" before final decision. See Rule 3. 43 (d). Findings of Fact 74 F.

that Fragramum sales were made "mostly" in the south- the bulk of the orders went to the south" he acknowledged that Some could have gone into every state. . . . " (Tr. 1172-73. At any rate, most of "the south" is subject to November-December frost (Appendix A).

Thus, considering the record as a whole, the examiner finds that respondents did advertise and did sell Fragramums in areas where they could not be successfully grown outdoors. Purchasers in such areas obviously could not achieve the results that respondents advertised. The Fragramum advertisements were therefore, false.

The foregoing findings essentially dispose of the issues respecting the Fragramum advertising, except that there remains the question of the results achievable where climatic conditions would permit outdoor blooming. Further discussion wi1 be limited to Fragramum advertisements in those few places (primarily California and Florida) where frost would not prevent blooming. Because the primary issue has been resolved and because respondents had discontinued the sale of Fragramums in 1961 (CX 32; Hoffman 2178-79), the following findings wi1 be somewhat abbreviated:

(1) The evidence (supra pp. 45-47) requires a finding that the representation of continuous blooming from August to November was false as to all areas. (Just why Dr. Parker had assumed blooming from " August to frost" for Fragramums grown outside the Los Angeles area when the earliest blooming she had obtained there was in October (RXs 48- , 60) is a question unanswered by this record. ) Although there was agreement that there was no August blooming, the actual duration of the blooming period in California and other frost-free areas is not clear. (Compare RXs 15, 47- , 60; and see Mr. Ackerson s contradictory testimony at Tr. 1020-28; compare Tr. 1023 , lines 20with Tr. 1025, lines 1- , and Tr. 1028, lines 5-13. (2) The Government has failed to prove that in areas where misleading,the Fragramum would bloom outdoors, it was false, and deceptive for respondents to advertise that the blossoms would be "fragrant. " (Complaint, Par. Nine (D) (4) ; Par. Ten. The record establishes that Fragramums were "fragrant. " Apparently the intent was to deal with the nature of the fragranceto challenge the advertising of a "sweet" fragrance or of other fragrances unlike the fragrance usually associated with chrysanthemums. But this was not done; the complaint merely said in effect that they were not fragrant.

LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact fra- Mr. Ackerson testified that the Fragramum had a "spicy" grance-a "sort of a pumpkin-pie spicy fragrance but that it was not unique or significantly different from that of other ) More-chrysanthemums. (Tr. 941- , 971- , 977- , 1004, 1012. over, Mr. Ackerson had authorized commercial use of a testimonial in which he had described the Loretto Fragramum as 11; Tr.having a "unique but delightful fragrance" (RXs 10, 977- 980-81) and had published an article in the NCS Bulletin that extolled the fragrance of the Fragramums. (RX 13 A- Tr. 1003-04.

Other offcials-national, state, and local-of the National Chrysanthemum Society also had written testimonials concerning the fragrance of the Fragramums. (RXs 12, 53-56; Ackerson 982-98; Parker 1824- , 1831-35.) See also RXs 13 F, 15, 47- 58-60; Parker 1810.

In any event, complaint counsel, in their proposed findings disclaim any objective standard for determining the existence of , 1004.a particular type of fragrance. (CPF 76; Ackerson 941 All things considered, the examiner finds that the allegations of the complaint regarding the fragrance of the Fragramums were not proved.

(3) The record does not afford a substantial basis for a finding that under suitable climatic conditions "many purchasers could not achieve the number and size of blossoms claimed in Fragramum advertising.

Mr. Ackerson s testimony tends to support, albeit with some qualification, the allegations of the complaint challenging the claim of 200 to 400 blooms the first season, many of them 4 inches in size. (Tr. 936- , 940, 949, 951- , 981, 1030-31.) But the facts relating to his testing of the Fragramums provide a dubious basis for a finding that the claimed results are impossible of achievement for "many purchasers" in frost-free or late-frost areas.

First, the plants he tested did not come from respondents. Although there is no doubt that they were Fragramums (they came as "rooted cuttings" from Dr. Parker, their originator), no showing was made of their comparabiJty with the plants sold commercially by respondents. (Tr. 912, 916- , 926- , 1012- 1032-33; compare RPF 83 , 103; see Viobin Corp. Docket 8579 Order Dismissing Complaint, September 16, 1964. ) Mr. Ackerson had made further cuttings from the rooted cuttings sent to him. (Tr. 914, 935.

Second, the record leaves in considerable doubt the identification Findings of Fact 74 F.

of the specific varieties that he planted and observed. (Tr. 912- 928-33. ) This is significant because Mr. Ackerson acknowledged that there are var.iations in blooming characteristics among the different varieties. (Tr. 1012.

Third, like Dr. Morey (supra pp. 41, 42), Mr. Ackerson had an uncertain memory of the test dates, as wen as of other details. The record reflects considerable confusion concerning the dates of the receipt and planting of the Fragramums, '.1 as wen as the dates of their removal from the garden to the greenhouse and the date and period of bloom. (Tr. 912- , 926, 932, 934- 939-40 999 1005 1018- 1054- 1069-70. Finally, Mr. Ackerson s observations of the blooming characteristics were made after the Fragramums had been moved from the garden into a greenhouse; and while he minimized the effect of such transplanting, he acknowledged that some shock would result. (Tr. 934- , 1019; see also Tr. 1054-57. ) He did not count the blossoms, nor did he measure their size. (Tr. 936, 1028, 1041-42.) He was testifying from memory; and while he had maintained some records, which he did not have with him they did not contain detailed information concerning his observations. (Tr. 937, 1042, 1047. ) He threw the plants out before blooming had stopped. (Tr. 940.) He conceded that his test procedures were not ideal for making a fair evaluation of the plants. (Tr. 1019-20. ) See also Tr. 1037, 1039-40. When these facts and Mr. Ackerson s equivocal testimony are weighed against respondents' evidence " the examiner finds that the advertising claims respecting the size and number of blooms in areas where the climate would permit blooming have not been shown to be false, misleading, or deceptive by a preponderance of the reliable, probative, and substantial evidence in the record. Again the finding is "not proved. E. Azaleamums The complaint (Par. Nine (E), Par. Ten) challenged advertising claims that the Azaleamum chrysanthemum plant would produce in the first season (1) 500 to 2 000 blossoms, (2) blossoms more than 2 inches in diameter, and (3) continuous blooming from August to November.

2.1 Complaint counsel stil seem to believe the test pla.nting was in the spring of 1961 (CPF (8), although Mr. Ackerson finally fixed the year !is 1960 . (Tr, 1070. ) Compare CPF 70 line 5.

. Respondents' evidence includes the equivocal testimony of Dr. Parker and such documentary evidence as RXs 15 47- , 58-60. This evidence has its shortcoming!! too (Bupra pp. 45, 46), but the burden I)f prod! is on the Government, not on respondents. LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact Without saying so, complaint counsel have abandoned the charges relating to the blooming period and the size of the blossoms and now contend only that the number of blossoms achievable in the first growing season '" was exaggerated in respondents advertising. (CPF 78.

The only evidence produced by the Government .in support of the charges concerning the Azaleamum plant was the testimony of Cornelius Ackerson. Despite Mr. Ackerson s status as a "semiprofessional" amateur in the field of chrysanthemums (Tr. 1049), his opinion concerning the Azaleamum rested on a shaky foundation. Although he testified that he grew some Azaleamums in about 1955 or 1956, they were not Azaleamums purchased from Lakeland or from sources connected with Lakeland, and the record fails to establish that they were, in fact, Azaleamums. (Ackerson 956- , 1031; Davis 1906-08. ) See Viobin Corp. Docket 8579, Order Dismissing Complaint, September 16, 1964. Moreover, Mr. Ackerson s testimony that an Azaleamum plant grown outdoors would not produce 2 000 blossoms in the first season 26 was based on his questionable memory of casual observations made 11 or 12 years previously. (Tr. 960 , 963- 966- , 1031 , 1041, 1048; see also Tr. 968-70. ) He conceded first-season growth of 500 to 600 blossoms. (Tr. 961, 971.) Standing alone, this testimony is of dubious value. When it is considered against respondents' evidence confirming the advertising claim in question (Davis 1882, 1885- , 1915; see RXs 99 107, 109), the charges respecting the Azaleamums must be dismissed for failure of proof.

IV. Representations of Plants as "New Paragraphs Eleven and Twelve of the complaint raise an issue relating to the propriety of advertising certain plants as "new. According to the complaint, the advertising of the Ray Bunge Scarlet Showers rose, the Wilson s Climbing Doctor rose, and the Fragramum chrysanthemums as "new" was false, misleading, and deceptive because these plants "had been offered to the public by the respondents in preceding seasons. Concerning the Azaleamum chrysanthemum, the complaint al- :J Ollce more there is some question about the representation of first.season results, Except for one testimonial claiming " 928 blooms on H. single first-year plant" (CX 8 B), respondents' advertising- essentially promises hundreds of blooms from Ii single plant in the first season, with thousands resulting from 6 plants in the first year and thousands in subsequent years. (CX 8 Ao The witness testified that such profuse blooming was possible if early growth was started in a greenhouse. (Tr. 963-64. ) He acknowledged also that second-season blooms totaling 2, 000 or more could be achieved by "dividing " the original plant. (Tr. 1028-30. Findings of Fact 74 F.

leges that respondents represented "that all varieties of Azaleamums were new in 1960 and were being offered to the public for the first time " whereas "some varieties of Azaleamums had been offered by others in preceding seasons. The facts are not .in dispute. The representation of the plants as "new" pervades all of respondents' advertising: CXs 5 B- (Ray Bunge Scarlet Showers), CXs 6 B-C (Wilson s Climbing Doctor), CXs 7 B-C (Fragramums), and CXs 8 B-C (Azaleamums). And the period during which each was advertised and sold has been established by the testimony of respondent Henry Hoffman. (Tr. 2176-79. ) These facts may be summarized as follows:

A. FTagramums Concerning the Fragramums, the charge must fail because respondents advertised and sold them only for one season, from 1960 unti the spring of 1961. (Hoffman 2177-79. ) There is no claim that the Fragramums were not new at the time that respondents advertised and sold them. (CPF 80. B. Azaleamums The charges respecting the Azaleamum must also be dismissed for failure of proof. A fair reading of respondents' advertising (CXs 8 B-C) does not support the allegation that it represented that all varieties of Azaleamums were new in 1960 and were being offered to the public for the first time." As a matter of fact, Lakeland' s advertising brochure (CX 8 B) discloses that the hybridization work leading to the creation of the Azaleamum dated back to 1933.

The Azaleamum was first trademarked in 1933 and was sold at the 1933 World's Fair. Azaleamums have been sold at retail for many years by the R. M. Kellogg Company, of Three Rivers Michigan. However, there are many varities of Azaleamums and the record establishes that the varieties advertised by respondents were .in fact new at the time and had not been previously offered to the public. (Davis 1916, 1919, 1909. ) To round out the record, the AzaJeamums were sold by Lakeland for one season, 1960-1961. Respondents have not sold them since the spring of 1961. (Hoffman 2178-79.

C. Rose Plants Resolution of the issue relating to the Scarlet Showers rose ....... .... .... . . , p. . ., .. . . . , , p. , . .. .... ... ... LAKELAND NURSERIES SALES CORP. , ET AL. Findings of Fact and the Wilson s Climbing Doctor rose presents more of a problem, although the basic facts are just as clear: (1) The first offer of the Scarlet Showers rose was made through a "small sampling of brochures " in December 1959 for the 1959-60 season. Few plants were available for sale at that time. The Scarlet Showers was last offered for sale in the spring of 1963. It was offered every year from 1959 to 1963. (Hoffman 2176- 2197; Harriet Cohen 198.

(2) The initial offer of the Wilson s Climbing Doctor rose was in 1959, and sales continued through the spring of 1961. (Hoffman 2177-78.

(3) The advertising for these roses was substantially unchanged during the years that these plants were advertised and sold by Lakeland. (Hoffman 2179. ) Representations made in the advertising included the following statements: As to the Ray Bunge Scarlet Showers rose: Amazing New Climbing Rose Development... (CX2 A). Acclaimed As A New Floral Sensation By Leading Garden Authorities. (CX 2 A).

New, Patented "Scarlet Showers" (CX 2 B, p. 1). So New. Our Supplies Are Extremely Limited For Next 2 Years To Come" (CX 2 B, p. 4).

Lakeland is proud to be the nursery organization selected. introduce this thrillng new super-blooming rose to the public (CXs 2 A, 5 B). you are invited to be one of the first gardeners to grow this spectacular new rose on this special introductory offer (CX 2 B l). This extraordinary event in rosedom is here being made available for the first time (eX 5 C 1).

Because this is the formal introductory year for "Scarlet Showers (CX 5 C, p. 4), As to the Wilson s Climbing Doctor rose: A new climbing form of the famous Gold Medal Winner The Doctor (CX 6 B), Xow, in this new climbing form The Doctor has even surpassed itself! (CX 6 B.

this new strain of Super. Roses ... (CX 6 B). New Wilson s " Climbing Doctor" (CX 6 B). Lakeland is proud to be the nursery organization selected. introduce this thriling new super-rose to the public (CX 6 B). Up to now, it has been kept under wraps. until Lakeland was ready to release it. The time has come! capture a "garden first" in your town. .. (CX 6 B).

you can be one of the very first gardeners to enjoy this. bloom in your yard (CX 6 C, p. 3).

. . , . . . . FEDERAL TRADE COMMISSIOJ\ DECISIONS Findings of Fad 74 F.

The Government rests its case on this evidence. Complaint counsel emphasize that:

The 'issue. is not the fact that the. plants were not new varieties when they were first advertised and offered for sale by the respondents but the fact that the respondents represented to the public for a period of two or mme yeu1' that the. plants were new products and were being offered for the first time. (CPF 80. To support its conclusory allegation that the term "new " was misleading in a material respect, the Government relies solely on a recent advisory opinion by the Commission to the effect that the Commission "would be inclined to question use of any claim that a product .is 'new' for a period of time longer than six months. (Advisory Opinion Digest No. 120 , April 15, 1967; see also Advisory Opinion Digest No. 146, October 24 1967. Government counsel have presented a singularly exiguous record for the application of the "general rule" prescribed in the Commission s opinion, and to accept their theory would pose variety of problems. However, it is not necessary to invoke that rule to resolve the basic issue presented. Thus, in the view taken by the examiner, there is no occasion to rely on what respondents call a "novel" but "manifestly incorrect" theory that as a matter of law, once a plant has been offered for sale, it becomes ' old' and cannot be advertised as new in a second season" (RPF 97), and their arguments in rebuttal (RPF 97-100, 104-05) are largely inapposite. On this record, the vice in respondents' representations is not simply the use of the word "new" but its use in such a way-particularly in conjunction with other representations-as to represent that the nursery products so described were being offered for the first time. Such representations were false, misleading, and deceptive when they were made subsequent to the season in which the plants were first offered. And the prohibition of such representations is in no different category than any other Commission order designed to prevent deception of the purchasing pu blic.

Analysis of the proposed order (Complaint, p. 66, Par. 5; CPF , Par. 5) shows that this is the misrepresentation intended to be reached. The proposed order would prohibit: '7 The skeptic may question the materiality of the misrepresentation, hut the law is well established that "the public is entitled to get what it chooses, " regardless of motivation (Federal Trade Cammislron v. Algoma Lumber Co. , 291 U. S. 67 , 78 (1934))-here the choice being a new, first.time-olTered plant. And the emphasis on the representation in the challenged advertising, as well as res:!wndents' spirited defense, suggests that respondent- have considered it a materio.J inducement to buy.

LAKELAND NURSERIES SALES CORP., ET AL.

Conclusions Representing, directly or by implication, that any of the aforesaid plants or products, is new or is being 'offered to the public for the first time: provided, however, that it shall be a defense in any enforcement proceeding instituted hereunder for respondents ' to establish that said plant or product is in fact new and is being offered to the public for the first time during the growing season in which the representation is made. Unless the representation of "new" is related to a first-time offer, the proposed order actually begs the question and sets no standard for what "new" means. It would prohibit respondents from representing that a product is "new" but would allow them to defend such a claim in an enforcement proceeding by establishing that the product "is in fact new. . . ." The crux is the added condition that the product "is being offered to the public for the first time during the growing season in which the representation is made.

In recognition of the fact that there may well be proper uses of the word "new" in the advertising of nursery products that would not be' under rstood as a representation of a first-time offer, the examiner has revised the proposed order to reach the misrepresentation found without any blanket interdiction of the word "new.

In summary, it is not arbitrary or unreasonable to prohibit a false representation that a plant is being offered for the first time -a representation that .is false because it had, in fact, been offered for and during a previous growing season. Since this is self-evident, there is no failure of proof on that score. (Compare RPF 97, 98, 101, 105.

The examiner has accordingly rejected as a defense respondents' evidence and argument respecting (1) the production and distribution problems that, according to respondents, are peculiar to the nursery products industry and (2) the supposed public reaction to the word "new" as a tired, overworked advertising expression. (RPF 98-100, 104-05.

CONCLUSIONS 1. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondents. 2. The complaint herein states a cause of action, and this proceeding is in the public interest.

3. The representations regarding the blossoming characteristics of the Fragramum chrysanthemums are found to be false misleading, and deceptive. (Section III (D) herein, pp. 44-48; Amended Complaint, Paragraphs Eight (D), Nine (D), and Ten. Conclusions 74 F.

4. The representations that the Ray Bunge Scarlet Showers rose and the Wilson s Climbing Doctor rose were being offered to the public for the first time were false, misleading, and deceptive because these representations were made for and in growing seasons subsequent to respondents' first offer of these plants. (Section IV (C) herein, pp. 52-55; Amended Complaint, Paragraphs Eleven and Twelve.

5. The use by respondents of such false, misleading, and deceptive statements, representations, and practices has had and may have the capacity and tendency to mislead members of the purchasing public into the erroneous and mistaken belief that such statements and representations were and are true into the purchase of substantial quantities of respondents' nursery products by reason of this erroneous and mistaken belief. 6. The acts and practices of the respondents, as found herein were and are all to the prejudice and injury of the public and of respondents' competitors and constitute unfair methods of competition in commerce and unfair and deceptive acts and practices in commerce, in violation of Section 5 of the Federal Trade Commission Act.

7. The reliable, probative, and substantial evidence in the record fails to support the other allegations of law violation contained in the amended complaint.

8. There is no evidence to support the allegation of Paragraph Fourteen of the amended complaint that respondents have placed in the hands of retailers and dealers the means and instrumentalities by and through which they may mislead and deceive members of the public.

9. The record supports the issuance of an order as to the respondents Henry L. Hoffman and Chester Carity, both individually and as corporate offcers. (Compare CPF 5-7 with RPF 107-08.

10. There is no evidence to support the allegations of the amended complaint as to respondents Lilian Zogheb and Allen Lekus.

11. Ordinarily, a cease and desist order properly follows a . finding of misrepresentations. But in the case of the principal misrepresentation found as to the Fragramums, that is, that climatic conditions prevented many purchasers from realizing the blossoming results advertised, a question arises as to the necessity in the public interest to issue the type of order the facts seem to warrant-an order against advertising that a plant wil achieve certain blossoming characteristics when, in fact, climatic LAKELAND NURSERIES SALES CORP., ET AL.

Conclusions conditions prevent any blooming at all. Moreover, respondents discontinued the sale of the Fragramums in 1961. In view of these circumstances, and considering (1) that the examiner has found no substantial misrepresentation of this plant .in areas where climatic conditions would permit its blooming 28 and (2) that he has found no proof of misrepresentation of the growing characteristics, etc. , of the other plants involved in this proceeding, it. may appear to be empty formalism to enter such an order.

A determination that no order is required might have been made if respondents (1) had established that they had relied in good faith on the representations of the originator of the Fragramums as to their blooming date in areas outside of Los Angeles; (2) had demonstrated that they had made reparation to all disappointed purchasers of the Fragramums in areas where they would not grow to blooming; and (3) had given assurances against repetition of such acts and practices. However, instead of confessing error and entering a plea in mitigation, respondents apparently determined, as they had a legal right to do, to wait and see whether the Government could prove its case against them.

Respondents contend that in advertising and marketing the Fragramums, they "had acted in the utmost of good faith and in reliance on Dr. Parker s representations." (RPF 104. ) The evidence does show that Dr. Parker had indicated the probabilty of August blooming of the Fragramums when grown in areas other than the Los Angeles area. However, respondents were at least on notice that the plants had not been tested in any area other than in the Los Angeles area. (RXs 15, 47- 60.

Although it is reasonable to assume, as a simple business and public relations proposition, if nothing else, that respondents would not knowingly sell plants that would not bloom in most sections of the country, nevertheless they did not fully explain the circumstances surrounding their distribution of the Fragramums as a possible basis for demonstrating that the public interest does not require the entry of an order. As the record stands, there is no basis for a finding that they acted in good faith, but rather the evidence suggests that they may have, at least, acted in reck- 28 The claim of August blooming was found to be false as to aU areaa (8UPTG., p. 48), but, in the examiner s opinion, this minepresentation is essE'tiaJly covered by Par. 1 of the Order, and a separate prohibition of misrepresentation as to the period. of blooming is not warranted by this record.

Order 74 F.

less disregard of the possibility that the Fragramums might not measure up to the advertising claims made for them. The record suggests that respondents rushed into an advertising and marketing campaign for the Fragramums before adequate testing had been completed.

The examiner accordingly concludes that the false advertising of the Fragramum chrysanthemums warrants the issuance of an order to cease and desist. However, in view of all the circumstances, the examiner further concludes that this record does not warrant the breadth of order proposed in the complaint (p. 15 Par. 4) and in the submittals of Government counsel (CPF 83 Par. 4).

ORDER It is ordered That respondents Lakeland Nurseries Sales Corp. trading as Lakeland Nurseries Sales or under any other name or names, and Henry L. Hoffman and Chester Carity, individually and as offcers of this corporation, and respondents' agents, representatives, and employees (including other corporate offcers), directly or through any corporate or other device, in connection with the offering for sale, sale, or distribution of rose plants chrysanthemum plants, or any other nursery products in commerce, as "commerce" is defined in the Federal Trade Commission Act, do forthwith cease and desist from: 1. Representing, directly or by implication, that any plant or nursery product that respondents offer for sale or sell will exhibit any specified growing, blossoming, or fruitproducing characteristics unless climatic conditions permit such results in the areas where the plant or product is advertised, offered for sale, or sold; or unless limitations imposed by climatic conditions are clearly and conspicuously disclosed in conjunction with such representations. 2. Representing, directly or by implication, through the use of the word "new" or otherwise, that any plant or nursery product that respondents offer for sale or sell is being offered to the public for the first time when, in fact such plant or product has been advertised, offered for sale or sold for or during a previous growing season. It is j"rther ordered That except for the allegations of Paragraphs Eight, Nine, and Ten relating to the Fragramum chrysanthemum plants, and Paragraphs Eleven and Twelve relating to the Ray Bunge Scarlet Showers rose and the Wilson s Climbing

,,() 5\01'5 Lic LAKELAND NURSERIES SALES CORP. , ET AL. Opinion Doctor rose, all other allegations of law violation contained the complaint be, and they hereby are, dismissed; and It is further ordered That the complaint be, and it hereby is dismissed as to respondents Lilian Zogheb and Allen Lekus. OPINION OF THE COMMISSON This matter has been considered by the Commission on the appeal of respondents from the hearing examiner s initial decision sustaining some of the allegations of the amended complaint but dismissing the major portion. Complaint counsel did not appeal from those parts of the examiner s decision adverse to it. Respondents are a New York corporation and its offcers Henry L. Hoffman and Chester Carity, who together own over 80 percent of Lakeland's stock.' Respondents have been engaged in the business of selling a wide variety of plants and other nursery products in commerce, as "commerce " is defined in the Federal Trade Commission Act.

On June 25, 1957, in Docket No. 6666 , the Commission accepted a consent agreement from respondents which required them, among other things, to cease and desist from representing the physical characteristics of a particular plant (Lythrum Morden Gleam), such as size at maturity, rate of growth or amount of bloom, unless such representations would hold true in all geographic regions where the plant was advertised and sold. See 53 F. C. 1189-91.

Thereafter, on November 1, 1965, the Commission instituted a new proceeding against respondents with the issuance of the complaint in Docket No. 8670. That complaint set forth allegations of violations based upon representations similar, in part, to those contemplated by the aforementioned order, but outside its narrow product coverage. By stipulation between the parties, that complaint was dismissed, and an amended complaint, similar to the one in Docket 8670, was issued to reopen the proceeding in Docket No. 6666.

The amended complaint charged respondents with unfair methods of competition and unfair and deceptive acts and practices 1 Lilian Zogheb flnd AJlen Lekus, who, respectively, had been secretary Rnd treasurer of the corporation, have not 1'cen offcers or directors of Lakeland for approximately the Jart years, and complaint counsel did not oppose a motion gral1ted by the examiner to dismiss the instant proceedings as to them 2 The stipulation made it clear that there would be no reliti ation of the issues raiser by the original complaint in Docket 6666 and that the consent order of June 25 , 1957, would remain in effect pending the final determination of the issues raised by the amended compfuint. In the event that an order were entered on the amended complaint, the stipulation provided that the parties would have the right to s.eek modification of the consent order. Opinion 74 F.

in violation of Section 5 of the Federal Trade Commission Act. It alleged that respondents had represented contrary to fact that Lakeland was a grower and propagator of the nursery products which it offered for sale; misrepresented in several respects the blooming characteristics of five pa ticular plants (the Nearly Wild Rose, Ray Bunge Scarlet Showers Rose. Wilson s Climbing Doctor Rose, and the Fragramum and Azaleamum chrysanthemum plants) and the results obtainable by purchasers thereof; and represented that three of the above plant varieties were being offered for sale for the first time, when in fact they had been previously offered by respondents in preceding seasons. In ali the complaint charged that respondents were responsible for over 20 false and misleading representations published in furtherance of their business.

The hearing examiner concluded that none of the allegations was sustained save those relating to the blooming characteristics of the Fragramum and the newness of the Scarlet Showers and Climbing Doctor ros plants. He entered an order which would enjoin such misrepresentations in connection with the sale of any nursery products offered by respondents. Upon consideration of the record, the initial decision, and the briefs and arguments of counsel, the Commission is of the view that no cease and desist order on the amended complaint is warranted. As we have noted, most of the allegations have not been proved. Furthermore, our judgment is that the record does not now contain reliable, probative and substantial evidence to support that part of the examiner s order (Paragraph 1) based upon alleged misrepresentations relating to Fragramum blooming.

The examiner found no substantial misrepresentations concerning that plant where climatic conditions would permit its blooming. It was where frost would strike prior to blooming that the represented results could not be achieved. Thus, complaint counsel had the burden of demonstrating (1) the boundaries of the areas where frost would prevent blooming of Fragramums as represented by Lakeland, and (2) the extent of respondents' advertising and sales of Fragramums in such areas. Although the record does contain some evidence on these questions, we believe, contrary to the examiner, that the evidence does not meet acceptable standards to justify issuance of an order to cease and desist.

The deficiencies of proof concerning point (1) could be cured by the Commission taking offcial notice of U.S. Weather Bureau , .

LAKELAND NURSERIES SALES CORP., ET AL.

Final Order records and reports (an approach taken by the examiner) and remanding the proceedings in order to provide respondents with the opportunity to disprove the noticed facts.' That procedure however, would not remedy the defects which we see in the proof relative to point (2), and we do not believe, on the facts of this case, that the public interest requires that complaint counsel be afforded another chance to introduce suffcient evidence demonstrating with clarity where these plants were advertised and sold. We therefore decline to take the necessary offcial notice and decline to remand the matter for additional hearings. Instead we conclude that the allegations relating to Fragramum blooming have not been proved and that there is no basis for Paragraph 1 of the examiner s order.

Finally, the allegations that respondents have falsely represented that two plant varieties were being offered for the first time, found by the examiner to be adequately supported by record, lose much of their significance when Jeft to stand alone. In the context of the entire complaint, these allegations had a value in that they helped to demonstrate the breadth of respondents' alleged proclivity to deceive. However it has not been proven that respondents are so inclined, and, therefore, we believe that these particular charges warrant no further investment of the Commission s enforcement resources. In sum, we are setting aside Paragraphs 1 and 2 of the examiner s order and dismissing the entire amended complaint. The findings and concl usions of the hearing examiner, to the extent that they conflict with this opinion, are rejected. Since no cease and desist order wil issue on the amended complaint there is no occasion to review the original consent agreement in this docket, and it remains in effect unchanged. An appropriate order wil be entered.

The Commission s action in this matter is without the concurrence of Commissioner MacIntyre.

ORDER DISMISSING AMENDED COMPLAINT FINAL ORDER This matter has been considered by the Commission on the appeal of respondents from the hearing examiner s initial decision holding that the allegations of the amended complaint had been sustained in part. Upon examination of the record and after full consideration of the briefs and arguments of counsel 3 Respondent. have preserved their right to such treatment by filing a timely request therefor under 3.43 (d) of the Commi sion s Rules of Practice for Adjudicative Proceedings. Complaint 74 F.

the Commission, for the reasons set forth in the accompanying opinion, has determined that respondents' appeal should be granted and that the amended complaint should be dismissed in its entirety. Accordingly, It is ordered That the amended complaint be, and it hereby , dismissed.

By the Commission, without the concurrence of Commissioner MacIntyre.