The relief sought is a declaratory judgment pursuant to Section 274 (d) of the Judicial Code, as amended (28 U. S. C. A., § 400) that (a) defendants have no authority to determine the legality of the language used on the labeling of plaintiff's products; (b) that defendants have no authority to force plaintiff to vary such language; (c) that defendants exceed their authority in seeking to compel plaintiff to include in its advertising the warnings demanded by defendants; (d) that defendants have no lawful authority to require plaintiff to include in its advertising warnings concerning consequences which might result in the use of the products contrary to the directions on the labels, and (e) that plaintiff has fully complied with all legal requirements imposed by the Federal Trade Commission Act upon its advertising of its products.

The defendants move to dismiss the complaint on the grounds (1) that this court lacks jurisdiction over the subject matter of the complaint and (2) that the complaint fails to state a claim against the defendants upon which relief can be granted.

By the Act approved September 26, 1914, Congress created the Federal Trade Commission, defined its powers and prescribed its duties. Section 5 of that Act, as amended, (15 U. S. C. A., § 45 (a)), denounces "unfair methods of compe tition in commerce, and unfair or deceptive acts or practices in commerce" and declares them unlawful. The Commission is "empowered and directed to prevent persons, partnerships or corporations (with certain exceptions not material here) from using unfair methods of competition in commerce and unfair or deceptive acts or practices in commerce."

It is to be noted that while the Congress defined certain of the words used in the Act, it did not undertake to define the expressions "unfair methods of competition" and "unfair or deceptive acts or practices." However, with reference to the latter expression, "unfair or deceptive acts or practices," it did provide that the "dissemination or the causing to be disseminated of any false advertisement within the provisions of subsection (a) of this section (15 U. S. C. A., § 52 (a)) shall be an unfair or deceptive act or practice in commerce within the meaning of section 45 of this title" (15 U. S. C. A., § 52 (b)).

The term "false advertisement," for the purposes of sections 52, 53, and 54 of Title 15, U. S. C. A., is defined to mean "an advertisement, other than labeling, which is misleading in a material respect" (15 U. S. C. A., § 55). In order to determine whether any advertisement is misleading "there shall be taken into account (among other things) not only representations made or suggested by statement, word, design, device, sound, or any combination thereof, but also the extent to which the advertisement fails to reveal facts material in the light of such representations or material with respect to consequences which may result from the use of the commodity to which the advertisement relates under the conditions prescribed in said advertisement, or under such conditions as are customary or usual" (15 U. S. C. A., § 55 (a)).

The dissemination of a "false advertisement" by a corporation otherwise than on the labels carried by its products is an unfair or deceptive act or practice which is declared unlawful and which the Federal Trade Commission is empowered and directed to prevent. The term "labeling" means all labels and other printed or graphic matter (1) upon any article or any of its containers or wrappers or (2) accompanying such article" (21 U. S. C. A. 321 (m)).

It appears that the plaintiff does advertise its products otherwise than by labeling, as above defined, through a publication designated "Miles New Weather Almanac and Hand Book of Valuable Information" "and/or other publications" (Paragraph Two, Exhibit B).

The complaint does not exhibit the Almanac or other publications containing its advertisements but, as we have seen, it alleges that the plaintiff's advertisements include one of the following statements: "Full Directions on Package Read Them" or "Read Full Directions on Bottle" or other similar cautionary directions. However, the "full directions" on the package or bottle do not clearly reveal the potential danger of the products when excessively used.

The Federal Trade Commission Act (15 U. S. C. A., § 45 (b)) provides that "whenever the Commission shall have reason to believe that any * * * corporation has been or is using any unfair method of competition or unfair or deceptive act or practice in commerce, and if it appear to the Commission that a proceeding by it in respect thereof would be to the interest of the public, it shall issue and serve upon such * * * corporation a complaint stating its charges in that respect and containing a notice of a hearing upon a day and at a place therein fixed at least thirty days after the service of said complaint."

A proceeding under this section of the Federal Trade Commission Act is a special statutory proceeding which may only be brought by and before the Commission. There is no statutory provision authorizing such a proceeding to be brought in or reviewed by a District Court. No adversary proceeding between the Commission and the plaintiff could be brought in the District Court for the purpose of determining whether the practices referred to in the complaint and proposed stipulation constitute unfair methods of competition or unfair or deceptive acts or practices in commerce prohibited by the Federal Trade Commission Act. Therefore, unless such jurisdiction is conferred by the Declaratory Judgment Act, the District Court has no jurisdiction to determine issues, either of fact or of law, which would be presented by a proceeding upon complaint by the Commission.

It is well settled that the Declaratory Judgment Act is not in itself a source of federal jurisdiction and did not enlarge the preexisting jurisdiction of the federal courts. Doehler Metal Co. v. Warren (Court of Appeals, D. C.), 129 F. (2d) 43; Utah Fuel Co. v. National Bituminous Coal Commission, 69 App. D. C. 333, 101 F. (2d) 426; Aetna Casualty & Surety Co. v. Quarles (4th Cir.), 92 F. (2d) 321.

Furthermore, the action of the Commission in determining that it has "reason to believe" that plaintiff has been or is using unfair methods of competition or unfair or deceptive acts or practices in commerce is a judgment based upon an exercise of discretion, and is the first or preliminary step necessary in assuming jurisdiction. As is well said by Mr. Justice Miller in Utah Fuel Co. v. National Bituminous Coal Commission, supra:

"To permit judicial review, either by injunction or declaratory judgment, of every procedural, preliminary and interlocutory order or ruling by which a person may consider himself aggrieved, would afford opportunity for constant delays in the course of administrative proceedings and would render orderly administrative procedure impossible. Moreover, it would result in bringing to the courts such an avalanche of trivial procedural questions as largely to monopolize their time and energies. That some injury may result from appellants being forced to await the entry of a final order before securing judicial review is a regrettable but not controlling factor under such circumstances."

The question of the Commission's jurisdiction to proceed will be passed on by the Commission. The plaintiff may raise that question in the proceeding before the Commission and obtain a ruling. If the Commission erroneously assume jurisdiction and issues an order to cease and desist, such an order and the proceedings upon which it is based are subject to review by and only by a Circuit Court of Appeals of the United States. The jurisdiction of that court "to affirm, enforce, modify or set aside orders of the Commission shall be exclusive" (15 U. S. C. A., § 45 (d)).

The plaintiff stresses the inconvenience and cost of requiring it to engage in the trial of a complaint before the Commission. Such an objection is not new and the courts have invariably held that inconvenience and expense of litigation is “part of the social burden of living under government." Petroleum Exploration, Inc., v. Public Service Comm., 304 U. S. 209, 82 L. Ed. 1294; Bradley Lumber Co. v. National Labor Relations Board, (5th Cir.) 84 F. (2d) 97, 100, certiorari denied, 299 U. S. 559, 81 L. Ed. 411; Roche v. Evaporated Milk Assn., - U. S. decided May 3rd, 1943.

The motion to dismiss must be sustained and it is so ordered.

JUNE 21st, 1943.

O. R. LUHRING, Justice.

Mr. CASSEDY. Now, I started out just a few moments ago to answer the statement that Mr. Reece made at the beginning of my testimony in regard to the Bromo-Seltzer case, wherein he said that the Food and Drug Administration had approved the label and after that was done the Federal Trade Commission brought proceedings against the Emerson Drug Co.

I am sure, basing my statement upon very reliable information, that Mr. Reece was not informed in that regard by Dr. Dunbar, because my information is that the Food and Drug has not approved the label offered by the Emerson Co. in regard to Bromo-Seltzer.

The Food and Drug instituted a seizure action.

Mr. REECE. If it does not interrupt-and I am not going to make a statement-did not the Food and Drug Administration draw up a label and a caution for the bromide preparations.

Mr. CASSEDY. Yes, sir; it did; and for the acetanilid also. But I point out to you, sir, that they notified the Emerson Drug Co., informing them after they had submitted this label that I have in my hand that it did not meet the requirements.

I have a photostatic copy of the memorandum sent out by Dr. Campbell, who was in charge then, in which they set out the warnings which they seek to require in the matter of bromides and acetanilids, and for acetanilid it provides

Warning, frequent or continued use may be serious, causing serious blood disturbances, anemia, collapse, or a dependence on the drug. Do not take more than the dose recommended. Not to be given to children.

And in the case of bromides:

"Warning, frequent or continued use may lead to mental derangement, skin eruptions, or other serious effects. Do not take more than the dosage recommended. Not to be taken by those subject to kidney disease."

Now, they wrote to the Emerson Drug Co. regarding Bromo-Seltzer that their proposed label did not meet those requirements.

And I am sure if this committee wants to find out whether that statement is true or not, Dr. Dunbar can give you the answer.

Mr. REECE. If that is in error, at least do not place the responsibility upon Mr. Hoge, because he is not representing Emerson Drug Co., and I did not get my information from him.

Mr. CASSEDY. Well, I do not know how you got it, whether it was Mr. Hoge or not, but the information you have is not correct.

The label that the Bromo-Seltzer people submitted to the Food and Drug Administration is here, and I might say that the way this came about was that after the Food and Drug law of 1938 was enacted, one of the very first proceedings they had, in fact the first proceeding they had under that act, was against a bromide-acetanilid preparation.

The eighty-first proceeding that they instituted was against BromoSeltzer. That proceeding was terminated by a judgment in January 1940-the second day of January 1940-in the United States District Court for the Southern District of New York.

I have a photostatic copy of a copy of that judgment.
Mr. RABIN. Is that a civil proceeding?

Mr. CASSEDY. That is a libel proceeding in which a large quantity of the product was seized. The Bromo-Seltzer Co. was called the claimant in that case.

Mr. REECE. In order to indicate that they had attorneys of some standing, it is my information that the firm of Davies, Richberg, Beebe, Busick and Richardson et al. represented them.

Mr. WHITELEY. Not at that time, Mr. Congressman.

Mr. REECE. Somewhere during the course of the proceedings? Mr. WHITELEY. I think they represent them now before the Commission, but they did not represent them in these libel proceedings, I am quite confident.

Mr. REECE. But they do now?

Mr. WHITELEY. In the Federal Trade Commission proceedings, but not in these court proceedings.

Mr. REECE. I had in mind that they were Emerson's attorneys in these proceedings before the Federal Trade Commission.

Mr. CASSEDY. Now in that in case that was instituted by the Food and Drug Administration in the District Court for the Southern District of New York, these same propositions were raised as are now raised by the Federal Trade Commission in regard to advertising, except that their proceeding was directed toward the labeling.

The label at that time I have here in my hand. It is a small one, while the one they later submitted after this case was over is this one [indicating].

That case was settled, as I understand it, by an agreement with the Bromo-Selter people that they would reduce the amount of acetanilid and the amount of bromides that were contained in that preparation. They did reduce amounts and change the formula, and then they submitted this label based upon the new formula to the Food and Drug Administration.

Now, it is this label that has never been approved by the Food and Drug Administration, not yet; and I might say that it has never been in accord with the requirements of the Food and Drug Administration in regard to their suggested warnings that they send out in regard to all drugs, as I read a few moments ago.

I wish to point out that the Federal Trade Commission has proceeded against this concern. I filed several copies of the complaint against the Emerson Drug Co., based principally upon their failure to reveal consequences of use of that product as it now exists, after that case was terminated. Now, that case was not litigated. As I understand it, there was no evidence offered. If the committee desires it, I have a copy of the judgment, copies of these labels, copies of these suggested warnings sent out by the Food and Drug Administion, and also the notice of judgment that was sent out by the Food and Drug Administration, that gives the history of the whole proceeding.

Mr. ROGERS. Is this last label in use now?

Mr. CASSEDY. Yes, sir; it is being used now.

Mr. RABIN. I take it, therefore, there is no conflict with respect to policy between your Commission and the Pure Food and Drug in this respect at all?

Mr. CASSEDY. May I point out, sir, that Dr. Dunbar in the long letter that he wrote Congressman Reece, in response to his request to point out the conflicts, if any, that existed, did not point out a single instance wherein we sought to require advertisements to reveal consequences, or wherein we followed the policy that he have been discussing, relating, as Mr. Reece contends, to labeling.

Dr. Dunbar does not point out a single instance wherein that procedure conflicts with the Food and Drug Administration.

Mr. RABIN. But my specific question is this: With respect to the labeling on the Bromo-Seltzer, is there any conflict between the Food and Drug and the Federal Trade Commission?

Mr. CASSEDY. Not at all. We are in exact accord. The requirements they desire on the label are the same as the requirements we contend for in these complaints, exactly the same.

Mr. REECE. That is, you are doing the same thing?

Mr. CASSEDY. We are doing the same thing, yes, in regard to the advertisements, as they are doing in regard to the labeling.

Mr. ROGERS. If they were to comply with this new label, you would have no right of action against them?

Mr. CASSEDY. I cannot answer them. The Commission would have to determine whether or not it would require in this case the advertisements to contain, or rather, to disclose the results which the product may cause.

These are serious results. Mental derangement, dependence, and collapse are not to be thought of lightly.

Mr. SADOWSKI. I think it would be well for the committee to have these labels.

Mr. ROGERS. The witness referred with some other exhibits to the fact that an agreement had been made. If we are going to try this case, let us have all the records or none of them.

That is my thought. It is not fair to us as a committee, I think, to have part of the records and not all of them.

Mr. RABIN. In any event, whether we have all or part, I think those two labels should be identified as used before.

Mr. CASSEDY. I have indicated one as "old" and one as "new." Mr. SADOWSKI. These two labels, I believe, ought to go in the record. (The labels are as follows:)

[New label]

Net weight, 6 ounces

EMERSON'S BROMO-SELTZER

"Reg. U. S. Pat. Off."

ACTIVE INGREDIENTS

Each heaping teaspoonful contains 21⁄2 grains Acetanilid, 5 grains Sodium Bromide, also Caffeine; Sodium Bicarbonate and Citric Acid, which when dissolved, form Sodium Citrate.

A RELIEF FOR SIMPLE HEADACHES AND NEURALGIA

Dose. A heaping teaspoonful in half glass of water; if not relieved, repeat after interval of three hours. Do not exceed two doses in twenty-four hours. In persistent or frequent headaches or neuralgia, consult your physician. Not for use by children.

Caution. If rash, drowsiness in daytime, or any unusual symptoms occur, discontinue use at once. Not for use by those having kidney or other organic disease, unless advised by physician. Do not exceed recommended dosage. Frequent and continuous use may result in serious effects.

Price, $1.20

Keep in a cool, dry place-tightly closed

THE EMERSON DRUG CO. OF BALTIMORE CITY, MD.