Court Opinion

ID: 6917620
Source: CourtListenerOpinion
Date Created: 2022-07-23 22:48:26.38248+00
Date Added: 2024-06-11T16:06:42.763854
License: Public Domain

RREITEMSTEIN, Circuit Judge
(dissenting).
The majority opinion sustains the Federal Trade Commission in requiring the manufacturer of an admittedly high quality domestic product to disclose in its advertising and on its container labels the source of its product. It does so in the absence of any claim that such manufacturer has ever made a deceptive or misleading statement in connection with the marketing of the product, rc-refined lubricating oil. A deceptive practice is said to result from the marketing of the product “in containers indistinguishable from those used generally to market lubricating oil refined from virgin crude, without any disclosure that it is made from previously used oil.” The deception is inferred from the assumption that the buying public prefers a lubricant produced from so-called virgin crude oil.
Certain facts shown by the uncon-tradicted evidence are pertinent. After crude oil is taken from the ground it is refined first to secure the more volatile distillates such as gasoline. The residuum is then refined again to obtain lubricating oils. Oil does not lose its chemical composition or its molecular structure by use. It does not wear out. The petitioner takes oil which has been drained from automobile crankcases and refines it just as the residuum of crude oil is refined after the capture of the more volatile distillates. The product so obtained has as high quality as that obtained from the residuum of the gasoline distillation.
Many minerals are processed and reprocessed and used and re-used over and over again. In this regard oil is no different from iron, gold and silver. The saving, accumulation, reprocessing and re-use of dental gold, silver ornaments and automobile steel does not differ in basic concept from the similar operations in regard to oil disclosed by this record.1 The assumption that a purchaser is deceived when he buys a good oil derived from a secondary processing operation is no different from an assumption that a purchaser of a new automobile is deceived if the steel in that automobile has been derived from the processing of scrap iron obtained from a junk yard.
Section 5(a) of the Federal Trade Commission Act, as amended,2 empowers *250and directs the Commission to prevent the use of “unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce.” Here the unfair method and the unfair or deceptive practice are said to arise from the use of the same type container as that used by manufacturers who produce from virgin crude and from the failure to disclose on the container that the lubricant is produced from previously used oil. There is nothing unfair or deceptive in using the same, common tin can type of container that is used for a multitude of products. The action of the Commission depends solely on the fact that the source of the oil is not disclosed.
With due deference to administrative expertness in fact finding, I see nothing in the record to sustain a finding that the public prefers lubricating oil produced from virgin crude. As testified, in substance, by the only witness who covered the attitude of the public,3 the purchaser desires quality and buys by brand names. Granting that a purchaser is entitled to get what he asks for, even if he is put off with something as good or better,4 quality is material in determining whether there is customer deception in circumstances where there is no misrepresentation. The fact that a buyer desires a good oil or a brand oil does not mean that he has any interest in the origin of that oil. The assumption that the public prefers a lubricant produced from virgin crude does not follow from the fact that the public seeks to buy a good oil. Yet the Commission makes such an assumption and from it finds a deception.
The product involved here is admittedly of high quality and the petitioner has admittedly made no false statements in regard to either the product or its use. Hence this is not a case for the Commission to exercise its well-recognized negative power of preventing falsity by forbidding certain conduct. Instead it is one where the Commission exercises an, affirmative power to require a statement as to origin for the prevention of a falsity which is not shown to exist.
In the foreign origin cases the power of the Commission to require an affirmative disclosure of origin has been upheld.5 In such cases the assumption of a popular preference for homemade goods is entirely reasonable and is supported by the provision of the tariff laws requiring the marking of imported goods with the name of the country of origin.6
Royal Oil Corp. v. Federal Trade Commission, 4 Cir., 262 F.2d 741, involved reclaimed, not re-refined, oil,7 and did not discuss the issues raised in this case. It is obvious that the sale of reclaimed oil without appropriate disclosure may be a deception. The same conclusion does not follow when the oil is re-refined as then the quality is as high as that found in oil produced from virgin crude.
Mohawk Refining Corp. v. Federal Trade Commission, 3 Cir., 263 F.2d 818, affirmed an order similar to that involved here and did so in a case concerning re-refined oil. Reliance was placed on the statement in Federal Trade Commission v. Algoma Lumber Co., 291 U.S. 67, 78, 54 S.Ct. 315, 78 L.Ed. 655, that the public is entitled to get what it chooses, though the choice be dictated by caprice or ignorance. Algoma was a case of mislabeling.8 Neither in Mohawk nor in the case at bar was there any false labeling. Although the right to make a capricious or ignorant choice is protected against misrepresentation, the recognition of such right does not require that *251a manufacturer foresee caprice or ignorance and not only refrain from misrepresentation but also affirmatively state every fact regarding his product which might conceivably be deemed important by the prejudiced and uninformed.
Mohawk quotes approvingly from P. Lorillard Co. v. Federal Trade Commission, 4 Cir., 186 F.2d 52, 58, that: “To tell less than the whole truth is a well known method of deception * * The validity of such statement is unquestionable but it has no applicability. The omission here of the statement of source has no relation to the quality or usability of the product. Nondisclosure may amount to a deceptive practice when it is accompanied by an affirmative act calculated to deceive, when it has a bearing on quality or usability, or when the non-disclosed facts pertain to national policy. None of these situations is found here.
It may be that advertisements and labels should be much more informative than they ordinarily are in current custom and practice. But Congress has never given to the Commission unrestricted power affirmatively to require informative statements. Its pertinent power is limited to the prevention of unfair methods of competition and unfair or deceptive acts or practices in commerce. Granting that the Commission is the expert body to determine the remedy necessary to eliminate such methods or practices,9 nevertheless, the affirmative function of requiring informative disclosures may only be exercised to prevent unfairness or deception.10 Believing as I do that nondisclosure of source of origin of product, standing alone and unaccompanied by any of the factors which I have mentioned, does not constitute unfairness or deception, I am brought to the conclusion that there is no rational basis for the findings, and no legal basis for the order, of the Commission. It is not necessary to comment on the far-reaching implications of the Commission’s action under present conditions wherein scientific advances establish methods of reprocessing without loss of quality and thus permit the use and re-use of many substances which are in limited supply.
I most respectfully dissent from the opinion of my associates.

. Tlie most common use and re-nse of a natural resource probably occurs in the utilization of water.

. 15 U.S.C.A. § 45(a).

. The witness, a distributor for a major oil company, was called by and testified for the Commission.

. See Ohio Leather Co. v. Federal Trade Commission, 6 Cir., 45 F.2d 39, 41.

. Eg. L. Heller & Son v. Federal Trade Commission, 7 Cir., 191 F.2d 954; American Tack Co. v. Federal Trade Commission, 2 Cir., 211 F.2d 239.

. See 19 U.S.C.A. § 1304.

. Reclaimed oil is used oil which has been strained or otherwise treated to remove contaminants. Re-refined oil is oil that has been produced by a refining process similar to that used in producing oil from virgin crude.

. “Vellow pine” lumber was falsely labeled as “white pine.”

. Jacob Siegel Co. v. Federal Trade Commission, 327 U.S. 608, 612, 66 S.Ct. 758, 90 L.Ed. 888.

. Cf. Alberty v. Federal Trade Commission, 86 U.S.App.D.C. 238, 182 F.2d 36, 39, certiorari denied 340 U.S. 818, 71 S.Ct. 49, 95 L.Ed. 601.