Court Opinion

ID: 9465591
Source: CourtListenerOpinion
Date Created: 2023-08-05 00:50:30.207027+00
Date Added: 2024-06-11T17:39:15.499089
License: Public Domain

DUNIWAY, Circuit Judge
(concurring and dissenting):
I concur in Judge Kelleher’s opinion, except for that part of it which remands paragraph 3 of the Commission’s order for further consideration. I think that paragraph 3 is well within the powers of the Commission. In response to Trans World’s complaints about the vagueness of paragraph 3, the Commission has included guidelines in its opinion.1 I submit that *218they give Trans World more freedom to deceive than it is entitled to demand. Trans World’s series of letters would be misleading and deceptive even if it could demonstrate that “suit in more than half the instances of nonpayment” would occur. Its series of communications is artfully phrased to instill in the debtor a belief, indeed, a fear, that if he does not promptly respond, legal action against him will follow immediately, with dire consequences to him. It is true that the papers do not flatly or literally say so, but that is the strong impression that they are intended to convey, and do convey. The Supreme Court has more than once recognized that “. much commercial speech is not provably false, or even wholly false, but only deceptive or misleading.” Friedman v. Rogers, 1979, -U.S.-, at-, 99 S.Ct. 887, 894, 59 L.Ed.2d 100, 110, quoting from Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 1976, 425 U.S. 748 at 771-72, 96 S.Ct. 1817, 48 L.Ed.2d 346. See also, Bates v. State Bar of Arizona, 1977, 433 U.S. 350, 383, 97 S.Ct. 2691, 53 L.Ed.2d 810. In each case, the Court saw no obstacle to a legislature’s dealing with that problem. See also, Young v. American Mini Theatres, 1976, 427 U.S. 50, 68, 96 S.Ct. 2440, 2451, 49 L.Ed.2d 310: “. . . regulatory commissions may prohibit businessmen from making statements which, though literally true, are potentially deceptive.” See also, n.31 at page 69, 96 S.Ct. 2440. To the same effect is Simeon Management Corp. v. F. T. C., 9 Cir., 1978, 579 F.2d 1137, 1145, 1146. See also, Securities and Exchange Commission v. C. R. Richmond & Co., 9 Cir., 1977, 565 F.2d 1101, 1106-107, where we held that “advertisements were ‘deceptive and misleading in their overall effect even though when narrowly and literally read, no single statement of a material fact was false,’ ” (emphasis in original), quoting from Spear & Staff, Inc., 42 S.E.C. 549 (1965). We have more than once held that “advertising capable of being interpreted in a misleading way should be construed against the advertiser.” Resort Car Rental Systems, Inc. v. F. T. C., 1975, 518 F.2d 962, 964. Accord, Simeon Management Corp. v. F. T. C., supra, 579 F.2d at 1146. I submit that these principles are applicable here.
The views expressed by Judge Sneed in his concurrence have never been adopted by the Supreme Court or by this court; they are contrary to views often expressed by this court. They are also contrary to facts of which we can take judicial notice. P. T. Barnum is said to have remarked about the suckers whom he lured into his sideshows with extravagant advertising that “there is one born every minute.” The reports of F.T.C. decisions in the field of misleading and deceptive advertising bulge with examples that verify Barnum’s observation. The depths of the gullibility of a large slice of the American population have never been fully plumbed. We read in the newspapers almost daily of the successful operation of the old Spanish pigeon drop.
It should be remembered that many of the debtors to whom Trans World’s communications go will be ignorant and trusting persons of modest means who have been persuaded by high powered hacks, quacks or flacks to incur indebtedness that they should never have incurred, for goods and services for which they have no need or use, and for which they cannot afford to pay. The successful operation of Trans World’s *219scheme depends upon the ignorance and gullibility of the recipients of its communications. It could easily comply with the Commission’s order if it chose to do so. It does not want to do so because compliance would take the sting out of its communications and defeat their purpose.
I am reminded of the story of the company officers who asked attorney Louis D. Brandéis how to comply with the Sherman Act. His reply was, that he could not tell them how to avoid falling off a cliff if they persisted in walking along the edge, but that he could tell them how to stay away from that edge. Trans World wants to walk the edge; so it splits hairs about the significance of “may.” As the Court said in F. T. C. v. Colgate-Palmolive Co., 1965, 380 U.S. 374 at 393, 85 S.Ct. 1035, 1047, 13 L.Ed.2d 904: “[I]t does not seem ‘unfair to require that one who deliberately goes perilously close to an area of proscribed conduct shall take the risk that he may cross the line,’ ” citing Boyce Motor Lines, Inc. v. United States, 1959, 342 U.S. 337, 340, 72 S.Ct. 329, 96 L.Ed. 367.
This court has repeatedly made it clear that a purpose of the Federal Trade Commission Act is to protect “that vast multitude which includes the ignorant, the unthinking and the credulous.” Standard Oil Co. of California v. F. T. C., 9 Cir., 1978, 577 F.2d 653, 657; Stauffer Laboratories, Inc. v. F. T. C., 9 Cir., 1965, 343 F.2d 75, 83. Similarly, we have held that “. . . the public is not under any duty to make reasonable inquiry into the truth of advertising.” Resort Car Rental Systems, Inc. v. F. T. C., supra, 518 F.2d at 964. That principle is applicable here.
The Supreme Court and this court have also repeatedly held that the Commission has a very broad discretion in framing its orders for the purpose of preventing further deception of the public. F. T. C. v. Colgate-Palmolive Co., supra, 380 U.S. at 392-93, 85 S.Ct. 1035; F. T. C. v. Mandel Brothers, Inc., 1959, 359 U.S. 385, 392-93, 79 S.Ct. 818, 3 L.Ed.2d 893; Jacob Siegel Co. v. F. T. C., 1946, 327 U.S. 608, 611-13, 66 S.Ct. 758, 90 L.Ed. 888; Simeon Management Corp. v. F. T. C., supra, 579 F.2d at 1147; Resort Car Rental Systems, Inc. v. F. T. C., supra, 518 F.2d at 964.
I think that paragraph 3 of the Commission’s order is well within the Commission’s discretion, and that it is neither overbroad nor impermissibly vague. Moreover, as the Court pointed out in F. T. C. v. Colgate-Palmolive Co., supra, 380 U.S. at 394, 85 S.Ct. at 1047-1048: “If, however, a situation arises in which [Trans World is] sincerely unable to determine whether a proposed course of action would violate the . order, [it] can, by complying with the Commission’s rules, oblige the Commission to give [it] definitive advice as to whether [its] proposed action, if pursued, would constitute compliance with the order.” As is shown in footnote 1, supra, Trans World has already received considerable definitive advice of this kind.
It seems to me that both Judge Kelleher’s opinion and Judge Sneed’s concurrence flout the foregoing principles in relation to paragraph 3. We have applied these principles in another debt collection case that is closely in point. Floersheim v. F. T. C., 9 Cir., 1969, 411 F.2d 874, 878. We should apply them here.
I would uphold the Commission’s order in toto.

. In response to Trans World’s request for guidance as to the meaning of paragraph 3, the Commission provided the following:
[References to legal action must be carefully and selectively employed to avoid deception. Respondents should not state or imply that legal action will be taken unless they indeed take such action in ail cases wherein the threat of legal action is not met by payment. Helix Marketing Corporation, et al., 83 FTC 514 (1973). And respondents should not state or imply that legal action may be taken unless they can demonstrate from their experience that suit is the ordinary response to nonpayment. Cf. Fair Debt Collection Practices Act, Pub.L. No. 95-109, § 805(c)(2); 15 U.S.C. § 1692c (1977). For purposes of the guidance respondents have solicited, suit in more than half the instances of nonpayment will suffice under this order to substantiate a claim that legal action may be taken, Helix Marketing Corp., supra.
In complying with the foregoing standard, respondents would do well to treat discernible classes of alleged debtors differently, depending upon the likelihood that members of each class will be sued. Unsatisfied claims of a particular client or clients should not be lumped together for the purpose of establishing that legal action is taken in more than 50 percent of all cases where it is the practice to treat different classes of claims in different ways. For example, there is record testimony suggesting that claims below a certain small amount are not ordinarily pursued by some creditors in court. (Tr. 78-79). If that is the practice then letters used to collect such small debts should not contain references to legal action (except in a particular case where the file has been reviewed and a decision to sue has been made.) On the other hand, if it is true, as respondents’ counsel indicated at oral argument, that it is the corporate policy of some clients to pursue nearly all unsatisfied claims, even small ones, through the courts, references to the possibility of eventual legal action would be appropriate in a series of letters drafted for such clients.
Distinguishing among discernible classes of debtors can also provide a way for respon*218dents to make mention of possible legal action in a non-deceptive fashion where it might otherwise be improper. For example, when serving a creditor whose policy is to sue infrequently, respondents might nonetheless be able to make non-deceptive mention of possible legal action in some cases by separating out a class of claims that their non-litigious client would ordinarily pursue (for example, bad checks written for large amounts.) In all instances, however, respondents when making any reference to possible legal action must avoid misrepresentation of its imminency. References to specific deadlines by which payment must be made or references to the need for haste, urgency, immediate action or whatever, coupled with references even to tentative legal action, will inevitably convey the impression that legal action impends. Such an approach is wholly improper in a series of form letters that are mailed over a period of weeks or months without any determination to sue in any particular case having been made.