Opinion ID: 369355
Heading Depth: 2
Heading Rank: 1

Heading: Pay'n Save's Liability.

Text: 95 Petitioner Pay'n Save asserts that it should have been neither prosecuted nor found liable. It contends that no possible public interest is served by prosecuting a retailer who had no part in the creation of the advertisements. Section 5(b) vests the Commission, not the court, with broad discretion in determining what constitutes the public interest. FTC v. Rhodes Pharmacal Co., 191 F.2d 744, 747 (7th Cir. 1951). As we have stated, 96 (W)e have no authority to determine what is in the public interest, except negatively in the sense of insuring the Commission does not attempt to use its powers to vindicate private rights, and possibly in the case of De minimis activity. 97 Montgomery Ward & Co. v. FTC, 379 F.2d 666, 672 (7th Cir. 1967). The Commission has not sought to vindicate private rights here, and Pay'n Save's activity cannot be characterized as De minimis. Consequently Pay'n Save's public interest argument is without merit. 98 Pay'n Save also argues that it should not have been held liable for its use of advertisements prepared by the others in the absence of any knowledge of falsity. Nothing in the record indicates that Pay'n Save actually had knowledge of falsity. As to whether Pay'n Save should have known of the misrepresentations, the Commission concluded that (i)f Pay'n Save had critically examined the advertising in light of the package insert, it should have been obvious that the advertising at least did not coincide with the plan. While this conclusion is undoubtedly correct, we need not rely on it in our discussion of liability because § 12 19 imposes a strict liability standard on disseminators of false advertising. Section 12(a) states in relevant part: 99 It shall be unlawful for any person, partnership, or corporation to disseminate, or cause to be disseminated, any false advertisement . . . . 100 The statute does not make mental state an element of violation and creates no exemption from liability for parties not involved in the creation of the false advertising or for unwitting disseminators of false advertising. When Congress intended to make such an exemption it did so expressly. Section 14(a) makes certain violations of § 12 misdemeanors, but § 14(b) creates an exemption from criminal liability for advertising agencies and media under certain circumstances. 15 U.S.C. § 54. Under these circumstances the omission of any exemption from § 12 indicates that Congress did not intend one. 101 Pay'n Save relies on a series of decisions which it says indicates that the liability of an advertising agency may depend upon the extent of its participation in the deception, which in turn depends upon a knowledge of the falsity of the advertisements. Colgate-Palmolive Co. v. FTC, 310 F.2d 89, 92 (1st Cir. 1962); Carter Products, Inc. v. FTC, 323 F.2d 523, 533-534 (5th Cir. 1963); Doherty, Clifford, Steers & Shenfield, Inc. v. FTC, 392 F.2d 921, 927-929 (6th Cir. 1968). The Commission has, on occasion at least, exercised its enforcement discretion to dismiss complaints against advertising agencies that were merely acting under the direction and control of the advertiser. See In re Bristol Myers Co., 46 F.T.C. 162, 176 (1949). Noting that this was a matter of administrative discretion, the First Circuit in the Colgate-Palmolive case enforced an order based on a finding that the agency was an active . . . mover in the deception, 310 F.2d at 92, but did not intimate that the FTC could not hold liable an agency that did not have knowledge of the deception. Carter Products is similar. There the Fifth Circuit enforced an order against an advertising agent that had actually participated in the deception. 323 F.2d at 533-534. In Doherty, Clifford the Sixth Circuit did say that knowing participation in the deception was necessary but found it to exist. 392 F.2d at 928, 929. Thus in each of these cases the advertising agency knew of the falsity, and the court sustained liability. In none of them was the court required to decide whether the agency was liable in the absence of knowledge. 102 The court in Doherty, Clifford recognized that (t)he fact that an advertiser made its representations in good or bad faith is not determinative of whether such statements are deceptive and misleading. 392 F.2d at 925. It is settled that the advertiser's intent to deceive is not an element of the violation. E. g., Chrysler Corp. v. FTC, 182 U.S.App.D.C. 359, 365 n.5, 561 F.2d 357, 363 n.5 (1977); Montgomery Ward & Co. v. FTC, supra, 379 F.2d at 670. We find no basis in the language of § 12 for not applying these principles to an advertiser who is a retailer. 103