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COMMONWEALTH v. HUSH-TONE INDUSTRIES (12/22/71)

decided: December 22, 1971.

COMMONWEALTH
v.
HUSH-TONE INDUSTRIES, INC., ET AL.



Original jurisdiction in case of Commonwealth of Pennsylvania v. Hush-Tone Industries, Inc., Hush-Tone Eastern, Inc., Rudy Bartell, Kate Bartell, Alonzo Hosford, Richard Fischer, Charles F. Hagerty, D. A. McGarvey and Thomas O'Rourke.

COUNSEL

Jeffrey Ernico, Assistant Deputy Attorney General, for plaintiff.

Lawrence E. Grant, with him Richter, Syken, Ross & Binder, for defendants.

Judge Rogers acting as Chancellor on behalf of the Court.

[4 Pa. Commw. 1 Page 2]

Issue

This action is brought by the Attorney General in the name of the Commonwealth of Pennsylvania against two corporations, Hush-Tone Industries, Inc. and Hush-Tone Eastern, Inc., and certain individuals alleged to be their officers, employees or agents under the Unfair Trade Practices and Consumer Protection Law, Act of December 17, 1968, P.L. , No. 387, 73 P.S. § 201-1 et seq. The complaint alleges that the defendants have been engaging in the sale of a hearing device, that they have made untrue advertising claims as to the product and that they have unlawfully promoted their said product as a means of inducing persons to purchase conventional electronic hearing aids. Plaintiff seeks injunctive relief and an order of restitution of money to Pennsylvania consumers who have purchased the product. The defendants have filed an answer denying the substantive allegations of the complaint.

[4 Pa. Commw. 1 Page 3]

The provisions of the Unfair Trade Practices and Consumer Protection Law, alleged to have been violated, are subsections (4) (v), (ix) and (xiii) of Section 2, 73 P.S. § 201-2(4)(v), (ix) and (xiii). By these, the following acts are included in the definition of "unfair methods of competition" and "unfair or deceptive acts or practices":

"(v) Representing that goods or services have . . . characteristics, . . . uses, benefits . . . that they do not have . . . ;

(ix) Advertising goods or services with intent not to sell them as advertised: . . .

(xiii) Engaging in any other fraudulent conduct which creates a likelihood of confusion or misunderstanding."

The issue is, therefore, whether the activities of the defendants or any of them are unfair methods of competition or unfair or deceptive practices as thus defined.

Findings of Fact

1. Plaintiff is the Commonwealth of Pennsylvania acting by its Attorney General.

2. Defendant, Hush-Tone Industries, Inc., is a corporation duly organized under the laws of the Commonwealth of Pennsylvania having a registered office at 121 South Broad Street, Fifth Floor, c/o Lawrence E. Grant, Esq., Philadelphia, Pennsylvania.

3. Defendant, Hush-Tone Eastern, Inc., is a foreign corporation located at Route 73 and Church Road, Mt. Laurel, New Jersey, and doing business in Pennsylvania through sales representatives on a regular basis and by advertising in the Philadelphia Inquirer and on Philadelphia radio and television stations.

4. Defendant, Rudy Bartell, is an employee of Hush-Tone Industries, Inc., and the former president of Hush-Tone Eastern.

[4 Pa. Commw. 1 Page 45]

. Defendant, Richard Fischer, is the service manager for Hush-Tone Industries, Inc.

6. Defendants, D. A. McGarvey and Charles F. Hagerty were employees of Hush-Tone Industries, Inc., until shortly before the trial in this matter but are no longer.

7. Defendant, Thomas O'Rourke, is the owner of the Hush-Tone Hearing Service, 1300 Fifth Avenue, Pittsburgh, Pennsylvania.

8. Defendant, Alonzo Hosford, is the president of Hush-Tone Industries, Inc., and owns the majority interest in said Hush-Tone Industries, Inc.

9. Defendant, Hush-Tone Industries, Inc., and Hush-Tone Eastern, Inc., advertise on radio, television, and in newspapers in Pennsylvania, two models of a hearing device which they call the Hush-Tone "Speech Clarifier" or "Speech Discriminator" and which will be referred to in these Findings as "the device."

10. The device consists of a plastic ear mold to the interior of which is attached a small tuning fork. It is not electrical.

11. The device is patented under #3,394,698 in which the only claimed use is that it suppresses internal head noises.

12. In said advertising it is represented that the device is a new help for nerve deafness.

13. In its advertising Hush-Tone claims that the device is already proven in over 18 months of field testing.

15. In said advertising it is represented that the device gives clearer, natural understanding to many who cannot use a hearing aid.

16. In said advertising it is represented that the device was developed through new technology in selective frequency control in the audible range.

17. In said advertising it is represented that the device clarifies the human voice without the annoyance of magnified background noise.

[4 Pa. Commw. 1 Page 518]

. In said advertising it is represented that the device gives relief from noise pollution in reducing noise fatigue, providing safety and improved communication through clarity for better understanding in noisy environments.

19. The defendants' device does not have the characteristics, uses or benefits the defendants represent it to have as set out hereinabove in Findings of Fact numbers 12, 13, 14, 15, 16, 17 and 18 and all of said representations are false.

20. Defendants, Hush-Tone Industries, Inc., and Hush-Tone Eastern, Inc., send and otherwise supply to prospective customers, including those who inquire as the result of said advertising, a pamphlet called the "Hush-Tone Story" which contains representations concerning the device.

21. In the pamphlet the "Hush-Tone Story", the defendants represent that the tuning fork used in the device is more sensitive than those used in modern electrically powered watches.

22. In the pamphlet the "Hush-Tone Story", the defendants represent that the device fills the need for many of those who require clarification rather than amplification.

23. In the pamphlet the "Hush-Tone Story", the defendants represent that the device is a new concept in speech understanding.

24. In the pamphlet the "Hush-Tone Story", the defendants represent that the frequencies of speech sounds are unscrambled and held thereby so as to override undesirable background noises, thus being retained a fraction longer in contrast with the damaged auditory nerves affected by these frequency ranges, thereby enabling the speech sounds to be recognized by the brain.

25. In the pamphlet the "Hush-Tone Story", the defendants represent that the device is a product capable of being beneficial to a portion of older people who

[4 Pa. Commw. 1 Page 6]

    have no need for amplification in the lower tones but need clarification in the higher frequencies.

26. In the pamphlet the "Hush-Tone Story", the defendants represent that the device is a product capable of being beneficial to a portion of the middle-aged people, preferably those who have worked in factories or other noisy environments who would like to protect their already impaired nerves from becoming more impaired, by filtering out unwanted background noises and other environmental noises.

27. In the pamphlet the "Hush-Tone Story", the defendants represent that the device is a product capable of being beneficial to a portion of the many factory workers of all ages whose hearing is so exposed to noises that their ability to understand the spoken word or the instructions clearly working around noisy machinery has been impaired or destroyed and that the device thus promotes safety.

28. In the pamphlet the "Hush-Tone Story", the defendants represent that the device filters background noises to their original level of intensity while causing an increase in understanding due to speech range activation.

29. In the pamphlet the "Hush-Tone Story", the defendants represent that the device offers a new concept of "natural amplification."

30. The defendants' device does not have the characteristics, uses or benefits the defendants represent it to have as set out hereinbefore in Findings of Fact 21, 22, 23, 24, 25, 26, 27, 28 and 29; and all of said representations are false.

31. The defendants, Hush-Tone Industries, Inc., and Hush-Tone Eastern, Inc., encourage their salesmen and advise their salesmen to make certain oral representations about the device.

32. The Hush-Tone salesmen are encouraged to orally represent to prospective purchasers of the device

[4 Pa. Commw. 1 Page 7]

    that it filters out the unwanted background noises thereby allowing the human voice to come in without distortion.

33. The Hush-Tone salesman are encouraged to orally represent to prospective purchasers of the device that it holds speech sounds a split-second longer, allowing the brain to pick them up and interpret them.

34. The Hush-Tone salesmen are encouraged to orally represent to prospective purchasers of the device that the device can help the majority of people who have an understanding problem.

35. The defendants' device does not have the characteristics, uses and benefits which its sales persons are encouraged to represent it to have as set out hereinbefore in Findings of Fact 32, 33 and 34, and said representations are false.

36. The defendants are selling the device in the Commonwealth.

37. The device does not have acoustical properties which will enable it to filter out background noises ...


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