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Reddi-Spred Corp. v. Federal Trade Commission.

January 18, 1956


Author: Mclaughlin

Before GOODRICH, MCLAUGHLIN and STALEY, Circuit Judges.

Opinion of the Court

By MCLAUGHLIN, Circuit Judge: This petition brings before us an order of the Federal Trade Commission calling upon petitioner to cease and desist from disseminating or causing to be disseminated by means of the United States mails or by any means in commerce any advertisement which represents or suggests that the oleomargarine or margarine it presents for sale is a dairy product.*fn1

The Commission's action was taken under the 1950 amendment to Section 15 of the Federal Trade Commission Act, 15 U.S.C. 55(a)(2)*fn2 whereby it found that the petitioner's advertisements in evidence were misleading in a material respect. Under 55(a)(1) that sort of advertisement is a false advertisement and Section 12 of the Act (15 U.S.C. 52) makes it "[unlawful] * * * to disseminate, or cause to be disseminated, any false advertisement - (1) By United States mails, or in commerce by any means, for the purpose of inducing, * * * the purchase of food, * * *."

Section 15(f) of the Act states that for the purposes of Section 15 the term "oleomargarine" or "margarine" includes "(1) all substances, mixtures, and compounds known as oleomargarine or margarine; (2) all substances, mixtures, and compounds which have a consistence similar to that of butter and which contain any edible oils or fats other than milk fat if made in imitation or semblance of butter."

Initially the hearing examiner dismissed the complaint. He did not dispute that the test as established by the statute was whether the advertisements in question represented or suggested that the margarine involved was a dairy product. He accepted what is plainly indicated in the history of Section 15(a)(2)*fn3 that its purpose, as far as our specific problem is concerned, was to prevent sellers of oleomargarine and margarine from representing as butter*fn4 a product composed of any oils and fats other than milk fat. However, he founded his decision upon his conclusion that the "[advertisements] do not tend to mislead the purchasing public into the belief that 'Reddi-Spred' is butter or any other dairy product, * * *" and therefore held that petitioner had not violated the law. The Commission upon consideration of the entire record reversed that decision, finding as a fact that "The prominent use of the word butter in respondent's advertising, together with the representation that Reddi-Spred is some kind of a product other than margarine because of its butter content, clearly suggests that it is a dairy product."

We think the decision of the Commission should be affirmed. It is soundly based upon the particular 1950 oleomargarine law. The consumer test, erroneously applied by the examiner, is strongly urged by appellant under the doctrine of United States v. 88 Cases, etc., 187 F.2d 967 (3 Cir. 1951). That decision is not in point. Its holding was that in Section 402(b)(4) of the Federal Food, Drug & Cosmetic Act (21 U.S.C. 342(b)(4)) the standard indicated is as said at page 971, "[the] reaction of the ordinary consumer under such circumstances as attended retail distribution of this product." The issue before us is not whether the advertisements of Reddi-Spred have the tendency or capacity to deceive the purchasing public into believing that it is in reality a dairy product or something sold under a trade name which is actually different from oleomargarine. Nor does the Commission contend there is no butter in Reddi-Spred. It does justifiably decide that the shrewd featuring of the word butter in the advertisements coupled with skillfully worded statements which infer that because of its butter content Reddi-Spred is substantially different from margarine suggests that Reddi-Spred is a dairy product and so violates the letter and spirit of the statute. With the advertisements before us it is impossible to say that the Commission's finding is arbitrary or clearly wrong.*fn5

Petitioner must face the flat prohibition of 15(a)(2). Any change in its terms is a problem for the Congress, not the courts. As the amendment is worded and was intended the violation consists in the suggestion itself. The Commission is not forced to go to the length of showing deception of the public. The design of the amendment is to prohibit a seller of oleomargarine from using dairy terms to imply that the oleomargarine offered is a dairy product. The 1950 law on its face does not contemplate public reaction or opinion evidence as its guide. It sets up a purely factual standard. Matching the advertisements in evidence against it they do, as the Commission has found, suggest that Reddi-Spred is a dairy product.*fn6

Petitioner also argues that the Commission's construction of Section 15(a)(2) prescribes a standard too vague for constitutional application.In our view the Commission's interpretation is in accordance with its plain meaning and legislative history. The heart of the law is its bar against representing or suggesting oleomargarine as a dairy product. Some necessary generalization is involved in the Commission's order so that the statute's objective may be attained but the purpose of the order cannot be misunderstood. It categorically forbids a distinctly defined practice.Dorfman v. Federal Trade Commission, 144 F.2d 737, 738 (8 Cir. 1944)."The order is not bound to chart a course for the petitioner. The petitioner can have no doubt of the evils complained of and sought to be corrected. The offenses of which the petitioner was found guilty are met by the order." Zenith Radio Corporation v. Federal Trade Commission, 143 F.2d 29, 31 (7 Cir. 1944).

Though not mentioned in its brief the petitioner in oral argument claimed that the absence of a definition of "dairy product" in the 1950 amendment rendered it so vague that it affords no criterion for avoidance of future liability. That question, if there is one, does not arise in this case for here the dairy product with which we are dealing, namely, butter, has been so stipulated.

The order of the Commission will be modified by striking from the proviso under paragraph #1 the following language "[or] of a truthful statement that said product contains butter or any other dairy product provided the percentage thereof contained is clearly and conspicuously set forth." and by inserting a period after the word "product." The proviso as modified will read:

"Provided, however, that nothing contained in this order shall prevent the use in advertisements of a truthful, accurate and full statement of all of the ingredients contained in said product."

The order of the Commission as modified will ...

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