When this Congress met the matter again came up, and food and drug bills were again introduced. Also, the able gentleman from California (Mr. Lea), who had succeeded the present majority leader, Mr. Rayburn, as chairman of the Interstate and Foreign Commerce Committee, introduced a bill amending. the Federal Trade Commission Act. Chairman Lea evolved the idea that instead of writing advertising provisions into the Food and Drug Act it would be more consistent with sound legislative policy to eliminate all reference to advertising in the food and drug bill and to so amend the Federal Trade Com-mission Act as to give to that Commission all necessary power to effectively prevent the dissemination of false and misleading advertising. This plan of the gentleman from California met with the approval of his committee, and the committee reported out what is now known as the Lea bill,which is a substitute for the Senate bill sponsored by the senior Senator from Montana, Senator Wheeler, amending the Federal Trade Commission Act and containing sections dealing with the advertising problem. It is this bill that is before you. As a member of the Interstate and Foreign Commerce Committee, I, with a number of my colleagues, have worked diligently and earnestly to write two bills which will accomplish necessary reform in food and drug control and do all that the Government may do to prevent the dissemination of false and misleading advertising. The bill amending the Federal Trade Commission Act and dealing specifically with advertising is before you for action. It is to be followed by a food-and-drug bill which I, as a member of the committee, believeTM will give the Food and Drug Administration of the Department of Agriculture ample authority with which to effectively regulate and control the food, drug, device, and cosmetic industries. If the House passes these two bills, I believe that agreements on such legislation can be effected with the other branch of Congress and we will have equipped two appropriate agencies of the Federal Government with all of the authority and power necessary to properly regulate the food, drug, device, and cosmetic industries, to prevent the dissemination of unlawful advertising, and protect the public. No legislation that Congress enacts is ever acceptable to everybody. Some may say that the Lea bill is not sufficiently exacting, while others are likely to criticize it in that it goes too far and gives the Federal Trade Commission too much power. Personally, I am of the opinion that your committee, in striking a happy medium, has done an excellent job and that this is the best bill on the subject that ever has been offered in either branch of the Congress. It ought to pass, as I believe it will pass, and thus accomplish the solution of an important problem that has been before the Congress for many years. (Mr. Reece of Tennessee asked and was given permission to revise and extend his own remarks in the Record.) Mr. REECE. Do you plan to discuss, Judge, the question of the right of the court to modify an order of the Commission? Mr. DAVIS. Mr. Kelley and Mr. Wooden discussed that at length and cited case after case. I do not think it is necessary to cover the same ground when there are many other things that have not been covered that I would like to cover. Mr. REECE. Do you mean to say the court has full authority to modify an order, then to give whatever measure of relief, which, in the court's opinion, the facts in the case justify? Mr. DAVIS. Those gentlemen discussed all of that and I do not care to enter into that discussion. It is off of what I am saying, and I just want an opportunity to cover this. Mr. REECE. It might be helpful to have your expression on it. Mr. DAVIS. I will discuss it at length with you when I have more time, but I do not have much time now as the committee wants to conclude the hearings today. Mr. REECE. I think it is really information which has an important bearing upon one provision of the bill; that is, as to whether the Commission feels that the courts have authority to modify an order to give the measure of relief which the courts feel the facts and circumstances might justify. I do see why it should be so difficult to state your views on this important question. Mr. DAVIS. Mr. Kelley discussed that. Mr. REECE. Mr. Kelley has already spoken. Mr. KELLEY. Nobody can answer that question. Of course, the judiciary of the United States has the power with respect to questions of law, and anytime, as a matter of law, if that is what is involved, the court has full power to affirm or set aside or modify. With respect to a conclusion that is factual and where the Commission issues an order based upon a factual matter, where they have concluded that there is deception and where the other side does not controvert it, that there is deception, so that the Commission and the court and the defendant all admit there is deception but that the defendant claims that the Commission, in applying the remedy, went too far, in that case that question is before the Supreme Court of the United States in the Alpacuna case. I cannot tell whether the Court is going to hold that the Court has power in such a case. I cannot tell whether they are going to hold that it was a matter of discretion for the Commission as to whether the Commission did abuse its discretion or whether it did not abuse its discretion. No one with any finality or with anything except guessing can answer that question until the Supreme Court of the United States decides that case. And whether the Court is going to follow the Royal Milling case or the White Pine cases, I do not know. So we might just as well quit talking until the Supreme Court decides; that is, talking with any authority as to whether or not the Court has power with respect to a remedy applied to a factual matter that is not in dispute. Mr. DAVIS. On the question of conflict that I started some time ago to get a chance to tell you about, after the enactment of the WheelerLea Act, the Federal Trade Commission, in its own meetings, decided that it would not proceed where there was nothing involved except labeling. A representative of the Food and Drug Administration asked the Commission, or asked the staff of the Commission, to proceed against the Fresh Grown Preserve Corp., which was selling impure and adulterated preserves under false labels and advertising. They had proceeded against them in a seizure proposition and had lost the case in court, and they said that if that stood, there would be absolutely no control for protecting the public against impure preserves, et cetera. The Federal Trade Commission, after discussing it, instituted an action in that case. As a matter of fact, there was also a circular that was distributed, making the same representations, as well as the labels, but the case was tried and the Commission rendered a ceaseand-desist order and it was affirmed by the circuit court of appeals. And here are the decisions in that case which I would like to go in the record. (The decisions referred to are as follows:) Docket 3682 UNITED STATES CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT No. 132-October Term, 1943 (Argued November 10, 1943. Decided December 6, 1943) FRESH GROWN PRESERVE CORPORATION, A CORPORATION; SUN DISTRIBUTING COMPANY, INC., A CORPORATION; RITE PACKING CORPORATION, A CORPORATION; MURRAY GREENBERG, AN INDIVIDUAL, AND LEO GREENBERG, AN INDIVIDUAL, PETITION— ERS, AGAINST FEDERAL TRADE COMMISSION, RESPONDENT Before SWAN, AUGUSTUS N. HAND, and CHASE, Circuit Judges. On motion to confirm supplemental findings and conclusions of the Federali W. T. KELLEY, Chief Counsel, Federal Trade Commission; Per Curiam: The petition to review and set aside the order made by the Federal Trade Commission against these petitioners has already been heard and decided insofar as was possible on the original record. See Fresh Grown Preserve Corp. v. Federal Trade Commission, 125 F. (2) 917. All but one of the issues were then decided adversely to the petitioners. We then held that they had been so limited in their effort to show that there was no known and established standard for the manufacture of fruit preserves that they had not been given a fair hearing and remanded the cause to the commission that the petitioners might have an ample opportunity to present their evidence on that subject. The commission has now accorded them the opportunity to introduce such evidence as they cared to offer upon that issue and, having duly considered this additional evidence in connection with all the other evidence brought out in the proceedings, has made supplemental findings which show that the standard did actually exist as previously found. The matter is now before us on the motion of the commission for the dismissal of the petition to review and for the confirmation and enforcement of its original cease-and-desist order and, as the record is now complete, we can decide the sole issue before left at large by determining whether there was sufficient evidential support for the findings in view of all the proof on that subject. It is apparent that there was and that the commission has made no error in its findings of fact. They undoubtedly support the cease-and-desist order. That being so, it follows from our former decision which disposed of all the other matters the petitioners have undertaken to argue anew that the present motion of the commission should be granted. Petition for review dismissed. Let a decree for the confirmation and enforcement of the cease-and-desist order be entered. Docket 3682 UNITED STATES CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT No. 51-October Term, 1941 (Argued November 13, 1941 Decided February 16, 1942) FRESH GROWN PRESERVE CORPORATION, A CORPORATION; SUN DISTRIBUTING COMPANY, INC., A CORPORATION; MURRAY GREENBERG, AN INDIVIDUAL; AND LEO GREENBERG, AN INDIVIDUAL, PETITIONERS, against FEDERAL TRADE COMMISSION, RESPONDENT PETITION TO SET ASIDE A CEASE-AND-DESIST ORDER OF THE FEDERAL TRADE COMMISSION Remanded to the Commission for further hearing. Before: SWAN, AUGUSTUS N. HAND, and CHASE, Circuit Judges. W. T. KELLEY, Chief Counsel, Federal Trade Commission; Martin A. Morrison, Assistant Chief Counsel, James W. Nichol and Earl J. Kolb, Special Attorneys, for Respondent. LOUIS HALLE, Attorney for Petitioners; Edward Halle, on the Brief. CHASE, Circuit Judge: This petition, under 15 U. S. C. A. § 45 (c), puts in issue for purposes of review an order made by the Federal Trade Commission requiring the petitioners to cease and desist from labelling, marking, or advertising their products as "preserves," or "pure preserves" unless they contain a fruit content in proportion to sugar of at least 45 to 55 by weight; from representing that their products, not having such proportions, are "preserves" or "pure preserves"; and from representing that their products are composed of named fruits when in fact they contain a mixture of fruits other than those stated. The pertinent part of the order appears in the margin.1 The order was made after hearing and report by a trial examiner on a complaint by the Commission. The complaint charged that all the petitioners were selling and distributing in interstate commerce to wholesale and retail dealers various kinds of fruit "preserves" which were represented by the petitioners to be "pure fruit preserves" by means of labels, tags, and markers attached to the jars and containers in which the preserves were packed; that the preserves were not preserves or "pure fruit preserves" within the popular meaning of those words in that they did not have a fruit content of at least 45 pounds of fruit to 55 pounds of sugar; and that such products contained mixtures of fruits other than as represented by the petitioners. It was further charged that the petitioners also made such false representations by means of advertising and sales literature. And it was alleged that, as a direct result of such conduct by the petitioners, trade had been unfairly diverted to the petitioners from their competitors which injured competition in interstate commerce in violation of the provisions of the * Federal Trade Commission Act (15 U. S. C. A., § 45). The petitioners answered the complaint by admitting that they were engaged in interstate commerce in selling fruit preserves in competition with others so engaged; that they labelled their products "pure fruit preserves"; and denied that they did any advertising. They admitted that the terms "fruit preserves" and "pure fruit preserves" were synonymous in the trade but denied that they were commonly understood to mean a product made from at least 45 pounds of fruit to 55 pounds of sugar; and denied the allegation that their products were not fruit preserves or pure fruit preserves within the popular meaning and acceptance of those terms. They denied that a fruit preserve was known and understood by the trade and purchasing public as a product prepared or manufactured in the above proportion of fruit to sugar; that their products contained any mixture of fruits other than as specified; and also denied generally any violation of the Act. Two affirmative defenses were alleged. The first of them appears to have been abandoned and will be disregarded. The second was to the effect that the alleged acts of the petitioners are not, if proved, violations of the Federal Trade Commission Act but that they at most call for proceedings against the petitioners only under the Food and Drug Act (21 U. S. C. A., § 1 et seq.). The evidence introduced was sufficient to support findings which the Commission made to the effect that all the material allegations in the complaint, except as to advertising, were proved; and the petitioners now rely (1) upon error in the exclusion of evidence and the curtailment of the cross-examiņation of witnesses who testified as to the existence of a standard formula of not less than 45 pounds of fruit to 55 pounds of sugar in the manufacture of fruit preserves; (2) upon failure of evidence of advertising; and (3) upon the affirmative defense that if their conduct subjects them to any proceedings at all such proceedings must be under the provisions of the Food and Drug Acts. We will deal with this affirmative defense first. It is based on the contention that, as the definition of "false advertisement" in § 15 (a) of the Act (15 U. S. C. A. 55 (a)) excludes labelling, and petitioners have at most but labelled their products, they cannot by so doing have violated the Federal Trade Commission Act. If they are right, of course the Commission had no jurisdiction. This argument, however, fails to take due account of two things. One is that the petitioners' conduct as found by the Commissioner amounted to unfair methods of competition in commerce in violation of § 5 of the Act (15 U S. C. A., § 45); and the 1 (1) Using the terms "preserves" or "pure preserves" on labels, tags, markers, or in advertising material, or in any other manner, to in any way designate, describe, or refer to preserve products which are not prepared from a mixture of clean, sound fruit with sugar in the proportion of at least 45 pounds of fruit to 55 pounds of sugar cooked to an appropriate consistency; (2) Representing, in any manner, whatsoever, that a product which contains a fruit content in a proportion of less than 45 pounds of clean, sound fruit to 55 pounds of sugar is a pure preserve or a preserve, or is anything other than an imitation or substandard preserve: (3) Representing, in any manner whatsoever, that respondent's products are composed of certain specified fruits when in fact, such products contain a mixture of fruits other than those represented. other, that the definition of false advertisement in § 15 is expressly limited to that term as used in §§ 12, 13, and 14. The courts have repeatedly upheld the jurisdiction of the Commission to prevent unfair competition by means of false labelling and misbranding regardless of the kind of the product. F. T. C. v. Winsted Hosiery Co., 258 U. S. 483; Royal Baking Powder Co. v. F. T. C., 281 Fed. 744 (C. C. A. 2); F. T. C. v. Morissey, 47 F. (2) 101 (C. C. A. 7); F. T. C. v. Good-Grape Co., 45 F. (2) 70 (C. C. A. 6). The last three of the cited cases dealt with unfair competition in the sale of food products. Since the WheelerLea amendment of March 21, 1938, we have three times upheld this jurisdiction of the Commission. Fioret Sales Co. Inc. v. F. T. C., 100 F. (2) 358; Justin Haynes & Co. Inc. v. F. T. C., 105 F. (2) 988; Parfumes Corday, Inc. v. F. T. C., 120 F. (2) 808. One of these cases dealt with a drug and the other with cosmetics. See also, Federal Trade Commission v. Kay, 35 F. (2) 160 (C. C. A. 7), another drug case. The amendment to § 5 (15 U. S. C. A. 45) of the Act did not modify the term "unfair methods of competition in commerce" but made unlawful what were called unfair or deceptive acts or practices in commerce and by so doing enlarged instead of lessened the scope of the jurisdiction of the Commission. The additions found in §§ 12 to 15, inclusive, were also to give the Commission greater control over the advertising of food, drugs, cosmetics, and the like by providing for criminal action as well as injunction; and only in proceedings under such sections is the definition of false advertisement in § 15 relevant, not in a proceeding like this under § 5. The only proof of advertising was the interstate sending by the petitioners of price lists to their customers in the wholesale and retail trade describing their products as pure fruit preserves and the representations to like effect by salesmen to such customers. We need not now decide whether that was advertising in violation of §§ 12 to 15, inclusive. Like false labelling, it may have been deceptive and have amounted to unfair competition under § 5, and we need now be concerned with nothing more. But whether anything the petitioners did was deceptive and in violation of § 5 depends basically upon whether the proceedings which resulted in the finding that there was a known standard for the manufacture of fruit preserves were conducted without harmful error. We do not think they were, and consequently there must be a remand to the Commission for findings after hearings which do afford the petitioners a fair opportunity to develop all the pertinent facts. Fashion Originators Guild v. F. T. C., 114 F. (2) 80, 83. During the hearings before the examiner the petitioners attempted to make it appear that the addition of pectin during the manufacture of preserves, a practice which has prevailed for years in both commercial and domestic preserve making, changed the requirement for a fixed proportion of sugar to fruit and made it impossible fairly to arrive at the standard the Commission found to have been established. A Dr. Osborn who had testified to this standard had stated on direct examination that some pectin was added in the commercial manufacture of preserves and that the usual domestic practice was to use a cup of fruit to a cup of sugar. On cross-examination the attempt to examine him regarding the home use of a pectin product sold under the trade name of "Certo" was blocked by objections the examiner sustained. The purpose was to show that the recipe widely distributed with this product called for the use of less fruit in proportion to sugar than he had previously testified was used in the home. Similar efforts to show that the standard the Commission found was by no means to be accepted as such because of the varying use of added pectin were made during the examination of witnesses Wallace, Kirkpatrick, and Hader and were frustrated in the same way. The evidence which the petitioners tried to place before the examiner was all relevant and of great importance in deciding what was really the most important issue. This cutting off the right of the petitioners to make clear what the decisive facts were prevented a fair hearing and makes it necessary to send the case back to the Commission for a finding as to a standard after giving the petitioners an opportunity to introduce for consideration whatever material and relevant evidence on that subject they may offer. It is immaterial that the Department of Agriculture did promulgate a regulation on September 5, 1940, which was in effect when the Commission issued this cease and desist order on September 20, 1940, establishing for preserves or jams a standard content, with stated optional variations, of not less than 45 parts of fruit ingredients by weight to 55 parts by weight of optional saccharine ingredients. That was not an effective standard during the time of the alleged |