Class Rings, Inc., et al.

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FEDERAL TRADE COMMISSIO:- DECISIONS Modifying Order 124 FTC. !' THE MA TTER OF CLASS RIGS, INe., ET AL MODlFYIJ\G ORDER IN REGARD TO ALLEGED VIOLA T10:- OF SEC. 7 OF THE CLA YT00J ACT AJ\D SEC. 5 OF THE FEDERAL TRADE COMMISSIOJ\ ACT Docket C-370!. Consent Order, Dec. 20. I996--Modifing Order, July 21 1997 This order reopens a 1996 consent order -- that prohibited the respondents from having any interest in or assets of Gold Lance, Inc. -- and this order modifies the consent order by settg aside a provision prohibiting the respondents, for one year, from employing or seeking to employ any person who is or was ernpIoyed during 1996 by Gold Lance, Inc. or Town & Country Corporation. ORDER REOPENTG ACI MODIFYING ORDER On May 29, 1997, respondents Commemorative Brands, Inc. fonnerly known as Class Rings, Inc. ("Class Rings ), and Castle Harlan Partners II, L.P. (collectively "CBI" ) fied a Petition of Commemorative Brands, Inc. and Castle Harlan Partners II, L.P. to Reopen and Modify Order ("Petition ), pursuant to Section 5(b) of the Federal Trade Commission Act, 15 U.S. e. 45(b), and Section 51 of the Commission s Rules of Practice and Procedure, 16 CFR 51. In its Petition, CBJ requests that the Commission reopen thc order in Docket o. C-3701 ("order ) to set aside paragraph V, which prohibits CBI, for a period of one year, from employing or seeking to employ any person who is or was employed at any time during 1996 by Gold Lance, Inc. ("Gold Lance ) or by Town & Country Corporation ("Town & Country ) in any position relating to the design manufacture, or sale of class rings (the "Employment Restriction For the reasons discussed below, the Commission has detennined that CBI has demonstrated changed conditions of fact suffcient to require the reopening and modification of the order 1 In its Petition ' CBI requests that the Commission modify the order to set aside the Employment Restriction contained in paragraph The restrictions in paragraph V expire by their owns of the order3 I Because the Commission has determined to gran! CBl' s Petition based on change of fact, we do not reach a determination with respect to CB1's assertion that the provision should be set aside under the se rarateIn supportpublicofinterestits Petition,standardCBI provided the affdavit of Jeffrey \-1. Brennan, President and Chief Executive Officer of Commemorative Brands, Inc. ("Brennan Affidavit 3 Paragraph V provides that Castle H;Jrlan and Class Rings shall not, for a period of one (I) year from the date this orcerbeeomes final, employ or seek to employ any person who is or was employed at any time during calendar year 1996 by Gole! Lance or by Town & Country in any position relating to the design, manufacture, or sale of Class Rings CLASS RIGS, INC. , ET AL.

Modifying Order tenns on Ianuary 9, 1998, one year from the date on which the order became final' CBI bases its Petition on changed conditions of fact and public The changes of fact interest considerationsS alleged by CBI include the fact that Gold Lance is no longer a stand-alone competitor, but is now a part of the industry s market leader, Iostens, Inc, ("Iostens Since the order became final, Iostens, the largest producer of class rings in the country, purchased Gold Lance from Town & Country. CBI contends that, as a result of the acquisition, the Employment Restriction no longer operates to achieve the purpose for which it was designed but has the unintended effect of precluding CBI from competing against Iostens for Gold Lancc employees In addition to change of fact, CBI argues that it is in the public interest to grant its Petition because the Employment Rcstriction now has the unintended effect of preventing Gold Lance employees, many of whom will soon be out of work due to the Iostens' acquisition from obtaining employment with CBI, which desires to offer jobs to qualified individuals. The Petition asserts that such a result is inconsistent with the purpose of the order and is unduly hannfu1 to these employees STA'\DARD FOR REOPE:'JJG A:\D YlODlFY1NG FINAL ORDERS Section 5(b) of the Federal Trade Commission Act, 15 U.sC. 45(b), provides that the Commission shall reopen an order to consider whether it should be modified ifthe respondent "makes a satisfactory showing that changed conditions of law or fact" so require. A satisfactory showing suffcient to require reopening is made when a request to reopen identifies significant changes in circumstances and shows that the changes eliminatc the need for the order or make continued application of it inequitable or hannful to competition Section 5(b) also provides that the Commission may modify an order when, although changed circumstances would not require reopening, the Commission detennines that the public interest so Order'IV 5 eBl docs not assert that any c1ange of law requires reopening the order 6 Petition 'I 12. Brennan Affdavit" 7 Petition , ,: 13- S. Rep. No. 96-500, 96th Cong. , 1st Sess 9 (1979) (significant changes or changes causing unfa:r disadvantage); Louisiana-Paciiic Corp. , Docket 1\0. C-2956, Letter to John C Hart (June 5 1(86), at 4 (unpublished) ("Hart Letter See also Uniled Stales v. Louisiana-Pacifc Corp- 967 F.2d 1372 1376-77 (9fh eil 19(2) ("A decision to reopen does not necessarily entail a decision to modify the order Reopening may occur even where the petition itself rioes not plcad facts requiring modification.

FEDERAL TRADE CO:vMISSION DECISIONS Modifying Order 124 F. requires. Respondents are therefore invited in petitions to reopen to Inshow how the public interest warrants the requested modification9 such a case, the respondent must demonstrate as a threshold matter 10 For example, it may besome affnnative need to modify the order. in the public interest to modify an order "to relieve any impediment " II Once suchto effective competition that may result from the order. a showing of need is made, the Commission will balance the reasons favoring the requested modification against any rcasons not to make the modification. 12 The Commission also will consider whether the particular modification sought is appropriate to remedy the identified hann, The language of Section 5(b) plainly anticipates that the burden is on the petitioner to make a "satisfactory showing " of changed conditions to obtain reopening of the order. The legislative history also makes clear that the petitioner has the burden of showing, other than by conclusory statements, why an order should be modified. The Commission "may properly decline to reopen an order if a request is merely conclusory or otherwise fails to sct forth specific facts demonstrating in detail thc nature of the changed conditions and the reasons why these changed conditions require the requested "J4 If the Commission dctennines that themodification ofthe order. pctitioner has made the necessary showing, the Commission must reopen the order to consider whether modification is required and, if , the nature and extent of the modification. The Commission is not required to reopen the order, however, if the petitioner fails to meet its burden of making the satisfactory showing required by the statute. The petitioner s burden is not a light one in view of the public interest in rcpose and the finality of Commission orders, 9 Hart Leite at 5; 16 Crr 2.51.

10 Damon Corp., Docket "\0- C-2916, Letter to Joel E. Hoffman, Esq. (March 29 1983), 1979- Transfer Binder, FTC Complaints and Orders, (CCH) 007, p. 22 585 ("Damon Letter ), at 2. Dallu/! Co/p. Docket 1\0. C-2916. 101 FTC 689 , 692 (1983). 12 Damon Letter at 2 13 Oamon Lcttcr at 4.

14 S. Rep. :.o 96-500, 96th Cong, 1st Sess 9. 10 (1979); see also Rule 2.51(b) (requiring affidavits in support of petitions to reopen and modify) 15 See Federated Department Slures, Inc. v. Moilie 425 U.S. 394 (198;) (strong pt.blic interest considerations support repose and finality) : , CLASS RI1GS, INC. , ET AL.

Modifying Order CB1 HAS DEMONSTRATED CHANGED CONDITIONS OF FACT THAT REQUJRE THE REOPEJ\ING AJ\D MODI FICA '110:' OF THE ORDER CBI's Petition demonstrates that Jostens s acquisition of Gold Lance eliminates the need for the Employment Restriction contained in paragraph V of the order. Thc complaint in this matter charged that on May 20, 1996, Class Rings, an entity controlled by Castle Harlan agreed to purchase all of the class ring assets from two companies Town & Country and C.TC Holdings, Inc. and CJC North America Inc. ("CJC" 16 At the time of the proposed merger, CJC was manufacturing class rings. Town & Country, another leading producer of commemorative jewelry, manufactured class rings through its class ring divisions Gold Lance and L.G. Balfour 17 UnderCompany, Inc. ("Balfour the consent order, Castle Harlan in effect, was prohibited from acquiring the Gold Lance business but permitted to acquire the Balfour business as well as the CJC business Paragraph V of the ordertrom Town & Countryl' , the subject of the Petition, was included in the order to ensure that Town & Country, through its subsidiary Gold Lance, remained a viable independent competitor in the manufacture and sale of class rings. On April 21 , 1997, Jostens, the largest producer of class rings in the United States, announced that it had purchased Gold Lance from Town & Country. Such a change, which was not foreseen at the time the Commission issued the order, results in the Employment Restriction having the unintended effect of precluding CBT from competing against the market leader Jostens for a significant number of skilled and experienced workers in this industry. Gold Lance is no longer in need of the protection afforded by the Employment Restriction. Therefore, the acquisition of Gold Lance by J ostens constitutes a change of fact that eliminates the need for the Employment Restriction and requires the reopening and modification of the order to set aside paragraph V.

Accordingly, It is ordered That this matter be, and it hereby is reopened and that the Commission s order be, and it hereby is modified to set aside paragraph V as of the effective date of this order.

The complaint alleged tllat the proposed merger would violate Section 7 of the Clayton Act 15 L. C. 18 , and Section of the Federal Trade Commission Act 5 U. C. 45. Complaint '1'124- 25. Com laint n )- Order'l!! J819 Order II I, FEDERAL TRADE COM\IISSIO'l DECISIONS Complaint 124 FTC.