Source: http://supreme.justia.com/cases/federal/us/380/374/case.html
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Matched Legal Cases: ['§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5', '§ 5']

FTC v. Colgate-Palmolive Co. - 380 U.S. 374 (1965) :: Justia US Supreme Court Center
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Case	U.S. Supreme CourtFTC v. Colgate-Palmolive Co., 380 U.S. 374 (1965)Federal Trade Commission v. Colgate-Palmolive Co.No. 62Argued December 10, 1964Decided April 5, 1965380 U.S. 374CERTIORARI TO THE UNITED STATES COURT OF APPEALS
(a) The FTC's judgment as to what constitutes a deceptive practice is to be accorded great weight by reviewing courts, and Page 380 U. S. 375 this admonition is especially true with respect to allegedly deceptive advertising, since the finding of a § 5 violation in this field rests so heavily on inference and pragmatic judgment. P. 380 U. S. 385.
The basic question before us is whether it is a deceptive trade practice, prohibited by § 5 of the Federal Trade Page 380 U. S. 376 Commission Act, [Footnote 1] to represent falsely that a televised test, experiment, or demonstration provides a viewer with visual proof of a product claim, regardless of whether the product claim is itself true.
The Federal Trade Commission issued a complaint against respondents Colgate and Bates charging that the commercials were false and deceptive. The evidence before the hearing examiner disclosed that sandpaper of the type depicted in the commercials could not be shaved immediately following the application of Rapid Shave, but required a substantial soaking period of approximately 80 minutes. The evidence also showed that the substance resembling sandpaper was in fact a simulated prop, or "mock-up," made of plexiglass to which sand had been applied. However, the examiner found that Rapid Shave could shave sandpaper, even though not in the short time represented by the commercials, and that, if Page 380 U. S. 377 real sandpaper had been used in the commercials, the inadequacies of television transmission would have made it appear to viewers to be nothing more than plain, colored paper. The examiner dismissed the complaint because neither misrepresentation -- concerning the actual moistening time or the identity of the shaved substance -- was, in his opinion, a material one that would mislead the public.
An appeal was taken to the Court of Appeals for the First Circuit, which rendered an opinion on November 20, 1962, 310 F.2d 89. That court sustained the Commission's conclusion that respondents had misrepresented the qualities of Rapid Shave, but it would not accept the Commission's order forbidding the future use of undisclosed simulations in television commercials. It set aside the Commission's order and directed that a new order be entered. On May 7, 1963, the Commission, over the protest of respondents, issued a new order narrowing and clarifying its original order to comply with the court's mandate. The Court of Appeals again found unsatisfactory that portion of the order dealing with simulated props, and refused to enforce Page 380 U. S. 378 it, 326 F.2d 517. We granted certiorari, 377 U.S. 942, to consider this aspect of the case, and do not have before us any question concerning the misrepresentation that Rapid Shave could shave sandpaper immediately after application, that being conceded.
After a court of appeals has set aside an order of the Commission on a point of law, the Commission may seek certiorari if it disagrees with the court's legal conclusion. Section 5(i) of the Federal Trade Commission Act [Footnote 2] contemplates that, when the time for filing a petition for certiorari has passed without a petition's being filed, the Commission will enter an order in accordance with the mandate of the court of appeals. The Commission may not merely restate its former position in a new order and then apply for certiorari when the court of appeals reiterates Page 380 U. S. 379 its previous objection. As was said in Federal Power Comm'n v. Idaho Power Co., 344 U. S. 17, 344 U. S. 20,
In its initial opinion, dated December 29, 1961, the Commission commented that the heart of the commercials was the visual "sandpaper test," which was designed to leave the viewer with the impression that he had actually seen such an experiment being performed. The Commission expressed the view that, without this visible proof of Rapid Shave's moisturizing ability, some viewers might not have been persuaded to buy the product. The Commission then entered into a far-reaching discussion on the Page 380 U. S. 380 use of mock-ups in television and the relationship between "truth" and "television salesmanship," and finally concluded that the use of the plexiglass prop was a deceptive practice. The Commission's order was as inclusive as its discussion. It ordered both respondents to cease and desist from:
The Court of Appeals understandably was concerned with the broad language in the Commission's opinion and order, especially since the Commission was not dealing with an established deceptive practice, but was applying the flexible standards of § 5 to a hitherto unexplored area. The breadth of the Commission's order was potentially limitless, apparently establishing a per se rule prohibiting the use of simulated props in all television commercials, since commercials, by definition, describe "the qualities or merits" of products. The court's impression that the order was "quite ambiguous" was not alleviated when, in oral argument, counsel for the Commission stated that, if a prominent person appeared on television saying "I love Lipsom's iced tea" while drinking something that appeared to be tea but in fact was not, the commercial would be a deceptive practice. Page 380 U. S. 381
Following the decision by the Court of Appeals, the Commission entered a new "proposed final order" on February 18, 1963. This order was accompanied by an explanatory opinion that admitted error in the original disposition of the case and expressed an intention to eliminate the errors found by the Court of Appeals. The Commission explained that its new order was not directed toward the broad prohibition of all undisclosed simulated props in commercials, but merely toward prohibiting respondents from misrepresenting to the public that it was seeing for itself a test, experiment or demonstration which purportedly proved a product claim. According to the Commission, the television commercial in question did not merely tell viewers that the experiment had been or could be performed, but instead told them that they were seeing it for themselves, and did not have to take the seller's word for it. This, and not the mere use of a prop, was the misrepresentation found to be a deceptive practice. Over the vigorous objection of respondents, the Page 380 U. S. 382 Commission issued its final order on May 7, 1963. Both respondents were ordered to cease and desist from:
Respondents again appealed to the Court of Appeals. Despite the urgings of respondents that it limit its review to a determination whether the Commission's order was consistent with the previous mandate, the court reexamined the Commission's new order on the merits. The court recognized that the new order no longer prohibited the use of all simulated props in commercials, but found that it would be impossible under it to distinguish between commercials which depicted a test, experiment or demonstration and those which did not. The court held that, so long as there is an accurate portrayal of a product's attributes or performance, there is no deceit, and instructed the Commission, "as we thought we had directed it before," [Footnote 9] to enter an order merely prohibiting respondents Page 380 U. S. 383 from using mock-ups to demonstrate something which in fact could not be accomplished.
We find it inconceivable that the Commission could have successfully sought certiorari from this judgment. Had it done so, it would have been forced to argue either that every use of mock-ups in commercials is a deceptive practice, an apparently unintended theory, or that this Court should reinstate the Commission's decision on a theory of its own, something the Court said it would not do in Securities & Exchange Comm'n v. Chenery Corp., 332 U. S. 194, 332 U. S. 196. Page 380 U. S. 384
In reviewing the substantive issues in the case, it is well to remember the respective roles of the Commission and the courts in the administration of the Federal Trade Commission Act. When the Commission was created by Congress in 1914, it was directed by § 5 to prevent "[u]nfair methods of competition in commerce." [Footnote 11] Congress amended the Act in 1938 to extend the Commission's jurisdiction to include "unfair or deceptive acts or practices in commerce" [Footnote 12] -- a significant amendment showing Congress' concern for consumers as well as for competitors. It is important to note the generality of these Page 380 U. S. 385 standards of illegality; the proscriptions in § 5 are flexible, "to be defined with particularity by the myriad of cases from the field of business." Federal Trade Comm'n v. Motion Picture Advertising Service Co., 344 U. S. 392, 344 U. S. 394.
We are not concerned in this case with the clear misrepresentation in the commercials concerning the speed with which Rapid Shave could shave sandpaper, since the Court of Appeals upheld the Commission's finding on that matter, and the respondents have not challenged the finding here. We granted certiorari to consider the Commission's conclusion that, even if an advertiser has himself conducted a test, experiment or demonstration which he Page 380 U. S. 386 honestly believes will prove a certain product claim, he may not convey to television viewers the false impression that they are seeing the test, experiment, or demonstration for themselves when they are not because of the undisclosed use of mock-ups.
We accept the Commission's determination that the commercials involved in this case contained three representations to the public: (1) that sandpaper could be shaved by Rapid Shave; (2) that an experiment had been conducted which verified this claim; and (3) that the viewer was seeing this experiment for himself. Respondents admit that the first two representations were made, but deny that the third was. The Commission, however, found to the contrary, and, since this is a matter of fact resting on an inference that could reasonably be drawn from the commercials themselves, the Commission's finding should be sustained. [Footnote 14] For the purposes of our review, we can assume that the first two representations were true; the focus of our consideration is on the third, which was clearly false. The parties agree that § 5 prohibits the intentional misrepresentation of any fact which would constitute a material factor in a purchaser's decision whether to buy. [Footnote 15] They differ, however, in their conception of what "facts" constitute a "material factor" in a purchaser's decision to buy. Respondents submit, in effect, that the only material facts are those which deal with the substantive qualities of a product. [Footnote 16] The Commission, Page 380 U. S. 387 on the other hand, submits that the misrepresentation of any fact, so long as it materially induces a purchaser's decision to buy, is a deception prohibited by § 5.
The Commission's interpretation of what is a deceptive practice seems more in line with the decided cases than that of respondents. This Court said in Federal Trade Comm'n v. Algoma Lumber Co., 291 U. S. 67, 291 U. S. 78: "[T]he public is entitled to get what it chooses, though the choice may be dictated by caprice, or by fashion, or perhaps by ignorance." It has long been considered a deceptive practice to state falsely that a product ordinarily sells for an inflated price, but that it is being offered at a special reduced price, even if the offered price represents the actual value of the product and the purchaser is receiving his money's worth. [Footnote 17] Applying respondents' arguments to these cases, it would appear that, so long as buyers paid no more than the product was actually worth and the product contained the qualities advertised, the misstatement of an inflated original price was immaterial. Page 380 U. S. 388
Respondents claim that all these cases are irrelevant to our decision because they involve misrepresentations related to the product itself, and not merely to the manner in which an advertising message is communicated. This distinction misses the mark for two reasons. In the first place, the present case is not concerned with a mode of communication, but with a misrepresentation that viewers have objective proof of a seller's product claim over and above the seller's word. Secondly, all of the above cases, like the present case, deal with methods designed to get a consumer to purchase a product, not with whether the product, when purchased, will perform up to expectations. We find an especially strong similarity between the present Page 380 U. S. 389 case and those cases in which a seller induces the public to purchase an arguably good product by misrepresenting his line of business by concealing the fact that the product is reprocessed or by misappropriating another's trademark. In each, the seller has used a misrepresentation to break down what he regards to be an annoying or irrational habit of the buying public -- the preference for particular manufacturers or known brands regardless of a product's actual qualities, the prejudice against reprocessed goods, and the desire for verification of a product claim. In each case, the seller reasons that, when the habit is broken, the buyer will be satisfied with the performance of the product he receives. Yet a misrepresentation has been used to break the habit, and, as was stated in Algoma Lumber, a misrepresentation for such an end is not permitted.
We need not limit ourselves to the cases already mentioned, because there are other situations which also illustrate the correctness of the Commission's finding in the present case. It is generally accepted that it is a deceptive practice to state falsely that a product has received a testimonial from a respected source. [Footnote 20] In addition, the Commission has consistently acted to prevent sellers from falsely stating that their product claims have been "certified." [Footnote 21] We find these situations to be indistinguishable from the present case. We can assume that, in each, the underlying product claim is true, and, in each, the seller actually conducted an experiment sufficient to prove to himself the truth of the claim. But in each the seller has told the public that it could rely on something other than his word concerning both the truth of the claim and Page 380 U. S. 390 the validity of his experiment. We find it an immaterial difference that, in one case, the viewer is told to rely on the word of a celebrity or authority he respects, in another on the word of a testing agency, and, in the present case, on his own perception of an undisclosed simulation.
We agree with the Commission, therefore, that the undisclosed use of plexiglass in the present commercials was a material deceptive practice, independent and separate from the other misrepresentation found. We find unpersuasive respondents' other objections to this conclusion. Respondents claim that it will be impractical to inform the viewing public that it is not seeing an actual test, experiment or demonstration, but we think it inconceivable that the ingenious advertising world will be unable, if it so desires, to conform to the Commission's insistence that the public be not misinformed. If, however, it becomes Page 380 U. S. 391 impossible or impractical to show simulated demonstrations on television in a truthful manner, this indicates that television is not a medium that lends itself to this type of commercial, not that the commercial must survive at all costs. Similarly unpersuasive is respondents' objection that the Commission's decision discriminates against sellers whose product claims cannot be "verified" on television without the use of simulations. All methods of advertising do not equally favor every seller. If the inherent limitations of a method do not permit its use in the way a seller desires, the seller cannot by material misrepresentation compensate for those limitations.
Respondents finally object to what they consider to be the absence of an adequate record to sustain the Commission's finding. It is true that, in its initial stages, the case was concerned more with the misrepresentation about the product's underlying qualities than with the misrepresentation that objective proof was being given. Nevertheless, both misrepresentations were in the case from the beginning, and respondents were never prejudicially misled into believing that the second question was not being considered. Nor was it necessary for the Commission to conduct a survey of the viewing public before it could determine that the commercials had a tendency to mislead, Page 380 U. S. 392 for, when the Commission finds deception, it is also authorized, within the bounds of reason, to infer that the deception will constitute a material factor in a purchaser's decision to buy. See Federal Trade Comm'n v. Raladam Co., 316 U. S. 149, 316 U. S. 152. We find the record in this case sufficient to support the Commission's findings.
The Court of Appeals has criticized the reference in the Commission's order to "test, experiment or demonstration" as not capable of practical interpretation. It could find no difference between the Rapid Shave commercial and a commercial which extolled the goodness of ice cream while giving viewers a picture of a scoop of mashed Page 380 U. S. 393 potatoes appearing to be ice cream. We do not understand this difficulty. In the ice cream case, the mashed potato prop is not being used for additional proof of the product claim, while the purpose of the Rapid Shave commercial is to give the viewer objective proof of the claims made. If, in the ice cream hypothetical, the focus of the commercial becomes the undisclosed potato prop and the viewer is invited, explicitly or by implication, to see for himself the truth of the claims about the ice cream's rich texture and full color, and perhaps compare it to a "rival product," then the commercial has become similar to the one now before us. Clearly, however, a commercial which depicts happy actors delightedly eating ice cream that is in fact mashed potatoes or drinking a product appearing to be coffee, but which is, in fact, some other substance, is not covered by the present order.
Boyce Motor Lines, Inc. v. United States, 342 U. S. 337, 342 U. S. 340. In commercials where the emphasis is on the seller's word, and not on the viewer's own perception, the respondents need not fear that an undisclosed use of props is prohibited by the present order. On the other hand, when the commercial not only makes a claim, but also invites the viewer to rely on his own perception, for demonstrative proof of the claim, the respondents will be aware that the use of undisclosed props in strategic places might be a material deception. Page 380 U. S. 394 We believe that respondents will have no difficulty applying the Commission's order to the vast majority of their contemplated future commercials. If, however, a situation arises in which respondents are sincerely unable to determine whether a proposed course of action would violate the present order, they can, by complying with the Commission's rules, [Footnote 22] oblige the Commission to give them definitive advice as to whether their proposed action, if pursued, would constitute compliance with the order.
Finally, we find no defect in the provision of the order which prohibits respondents from engaging in similar practices with respect to "any product" they advertise. The propriety of a broad order depends upon the specific circumstances of the case, but the courts will not interfere except where the remedy selected has no reasonable relation Page 380 U. S. 395 to the unlawful practices found to exist. [Footnote 23] In this case, the respondents produced three different commercials which employed the same deceptive practice. This, we believe, gave the Commission a sufficient basis for believing that the respondents would be inclined to use similar commercials with respect to the other products they advertise. We think it reasonable for the Commission to frame its order broadly enough to prevent respondents from engaging in similarly illegal practices in future advertisements. As was said in Federal Trade Comm'n v. Ruberoid Co., 343 U. S. 470, 343 U. S. 473: "[T]he Commission is not limited to prohibiting the illegal practice in the precise form in which it is found to have existed in the past." Having been caught violating the Act, respondents "must expect some fencing in." Federal Trade Comm'n v. National Lead Co., 352 U. S. 419, 352 U. S. 431.
Under the limited grant of certiorari in this case, the Court must assume that the advertiser can perform the experiment in question, and that the demonstration is as simple to execute as it appears on television. The only question here is what techniques the advertiser may use to convey essential truth to the television viewer. If the claim is true and valid, then the technique for projecting that claim, within broad boundaries, falls purely within the advertiser's art. The warrant to the Federal Trade Commission is to police the verity of the claim itself. Page 380 U. S. 396
The faulty prop in the Court's reasoning is that it focuses entirely on what is taking place in the studio, rather than on what the viewer is seeing on his screen. That which the viewer sees with his own eyes is not, however, what is taking place in the studio, but an electronic image. If the image he sees on the screen is an accurate reproduction of what he would see with the naked eyes were the experiment performed before him with sandpaper in his home or in the studio, there can hardly be a misrepresentation in any legally significant sense. While the Commission undoubtedly possesses broad authority to give content to the proscriptions of the Act, its discretion, as the Court recognizes, is not unbridled, and, "in the last analysis, the words "deceptive practices" set forth a legal standard, and they must get their final meaning from judicial construction" (ante, p. 380 U. S. 385). In this case, assuming that Rapid Shave could soften sandpaper as quickly as it does sand-covered plexiglass, a viewer who wants to entertain his friends by duplicating the actual experiment could do so by buying a can of Rapid Shave and some sandpaper. If he wished to shave himself, and his beard were really as tough as sandpaper, he could perform this part of his morning ablutions with Rapid Shave in the same way as he saw the plexiglass shaved on television. Page 380 U. S. 397
It is commonly known that television presents certain distortions in transmission for which the broadcasting industry must compensate. Thus, a white towel will look a dingy gray over television, but a blue towel will look a sparkling white. On the Court's analysis, an advertiser must achieve accuracy in the studio even though it results Page 380 U. S. 398 in an inaccurate image's being projected on the home screen. This led the Court of Appeals to question whether it would be proper for an advertiser to show a product on television that somehow, because of the medium, looks better on the screen than it does in real life. 310 F.2d 89, 94; 326 F.2d 517, 523, n. 16.
The Commission ordered both respondents to cease and desist from using mock-ups in any "test, experiment or demonstration" -- in the case of respondent Bates, whether or not relating to Colgate products -- as a result of its finding that the use of a plexiglass mock-up in this instance constituted a separate misrepresentation. If that were the only misrepresentation found by the Commission, Page 380 U. S. 399 I would affirm the judgment of the Court of Appeals. The Commission, however, found another misrepresentation, not disputed here, namely, that Rapid Shave would shave sandpaper as quickly as plexiglass, and, on this record, I cannot say that such finding might not support the Commission's broad order.