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Vulcanized Rubber & Plastics Co. v. United States.

filed: March 8, 1961.


Author: Mclaughlin

Before McLAUGHLIN, HASTIE and FORMAN, Circuit Judges.

Opinion of the Court

McLAUGHLIN, Circuit Judge: This is an appeal from a summary judgment of the District Court for the Eastern District of Pennsylvania, awarding the United States civil penalties in the amount of $6,000 against Vulcanized Rubber & Plastics Company under Section 5(1) of the Federal Trade Commission Act as amended, 15 U.S.C.A. ยง 45(1), for violation of a cease and desist order issued by the Federal Trade Commission.

The facts are not in dispute. The defendant is a manufacturer of combs. Prior to 1950, defendant manufactured all its combs by the sulphur vulcanizing method. Under this process rubber and sulphur are vulcanized under heat, resulting in a product recognized as "rubber" or "hard rubber" (hereafter both will be referred to as rubber). Until that time the defendant properly labeled its combs rubber. In 1950 defendant changed its manufacturing process to the injection mold type, which necessitated a change in the type of compound used to Kralastic D, a patented material made by the United States Rubber Company which was composed of approximately 13% nitrile rubber, 85% hardening resin and small percentages of stabilizer and color. Notwithstanding this change, the defendant continued to label its combs rubber. A complaint was instituted by the Federal Trade Commission and after extended hearings,*fn1 the following Cease and Desist Order was entered:

"IT IS ORDERED that respondent, Vulcanized Rubber & Plastics Company, a corporation, and its officers, agents, representatives, and employees, directly or through any corporate or other device, in connection with the offering for sale, sale and distribution in commerce, as 'commerce' is defined in the Federal Trade Commission Act, of any combs designed for use on human hair, to forthwith cease and desist from representing, directly or by implication, by any advertisement, packaging, labeling, branding, stamping, or other marking or indication that such combs are 'rubber' or 'hard rubber' or made of 'rubber' or 'hard rubber' unless such combs are in fact made of vulcanized hard rubber."

A petition for review was then filed with the Court of Appeals for the District of Columbia. Prior to action thereon by that court, the defendant filed a compliance report with the Commission stating that it would forthwith label its combs rubberresin. The Commission rejected this. The defendant moved and was granted leave to amend its pending petition for review. This amendment informed the court of the Commission's interpretation and contended that it exceeded the bounds established by the complaint, findings and Order. In a per curiam opinion dismissing the petition for review, the court stated at 258 F.2d 685:

"We do not understand the order as written to be challenged, but only the Commission's subsequent interpretation of its order. However, this interpretation may be changed or it may never be enforced.We hold that there is no controversy calling for judicial review of the interpretation at the present time."

Subsequently, the defendant filed another compliance report with the Commission, still asserting the right to label its combs rubber-resin.The Commission rejected this and instituted the present action for violation of the Order and recovery of civil penalties. The district court on cross motions for summary judgment found for the plaintiff and fixed the penalty at $6,000*fn2 This appeal followed.

The precise issue to be determined in this appeal is whether the defendant by labeling its combs rubber-resin violated the Commission's cease and desist Order. Federal Trade Commission v. Morton Salt Co., 334 U.S. 37. 54 (1948).

Defendant's principal argument is that the labeling of its combs as being made of rubber-resin, does not fall within the scope of the Commission's Order. Necessarily defendant urges that the Order only prohibits it from labeling combs rubber, and that until there is a hearing by the Commission and a cease and desist order issued specifically prohibiting defendant from labeling its combs rubber-resin, an action for civil penalties cannot be maintained. We feel that the language of the order and the background of administrative hearings in this case completely refutes defendant's argument.

The Hearing Examiner found that the term rubber had a fixed and definite meaning. It was used to describe a distinct process whereby rubber and sulphur are vulcanized under heat. In the administrative proceeding, defendant contended that although the term rubber was recognized as being descriptive of those ingredients and that process, the term had acquired a secondary maning broad enough to include defendant's product which did not contain sulphur, was not vulcanized and only contained a small percentage of nitrile rubber. The Hearing Examiner disallowed this argument, and in his findings, which were adopted by the Commission, stated:

"The gist of this proceeding is whether or not the representations of respondent in its advertising and labeling or branding of combs that are made of Kralastic D as 'Hard Rubber' or 'Rubber' are false, misleading and deceptive. It is found that they are false, misleading and deceptive as these combs are not made or composed of rubber or hard rubber but are made or composed in large part of materials other than rubber or hard rubber and do not contain any sulphur and are not made by the vulcanization process but are admittedly made by the injection mold or extrusion process."

The final Order drafted in light of the entire record, was designed to eliminate defendant's labeling practice both presently and in the future. Additionally, the Order not only prohibited the specific direct representations that the combs were made of rubber, but also prohibited any representation which "by implication " so represented the product "unless such combs are in fact made of vulcanized hard rubber."*fn3 The labeling of the combs as being made of rubber-resin falls within this latter proscription of the Order. United States v. Piuma, 40 F.Supp. 119 (S.D. Cal. 1941), aff'd sub nom. Piuma v. United States, 126 F.2d 601 (9 Cir. 1942); In re Whitney & Company, 273 F.2d 211 (9 Cir. 1959). It impliedly represents the combs to be made by a vulcanizing process which contains rubber and sulphur, when in fact the combs do not contain the ingredients nor are they produced by the process found by the Commission to be necessary to permit such labeling. Cf. Arrow Metal Products Corp. v. Federal Trade Com'n, 249 F.2d 83 (3 Cir. 1957); Masland Duraleather Co. v. Federal Trade Commission, 34 F.2d 733 (3 Cir. 1929).

In the Piuma case supra, the defendant was ordered to cease and desist from, among other things, representing directly or indirectly that his product was "a gland tonic" and that it was "the best gland remedy known." After a purported compliance by the defendant, the government instituted an action to recover civil penalties to which the defendant interposed the defense, inter alia, that he had changed ...

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