FEDERAL TRADE COMMISSION, Petitioner-Appellant, v. NATIONAL COMMISSION ON EGG NUTRITION, Respondent-Appellee.
No. 74-2043
United States Court of Appeals, Seventh Circuit.
May 15, 1975
Rehearing Denied June 17, 1975
517 F.2d 485
Judge Hunter related in a footnote:
It is worthy to note that Mr. Brown and Mrs. Bucensky identified only one of the six lineup participants. Thus, each of these witnesses picked one man out of the three relatively clean-shaven men. Mrs. Khan identified two of the six participants, and therefore she excluded one of the relatively clean-shaven men.
The court further found that:
In addition to the reasons stated hereinabove, the Court finds that government has established by clear and convincing evidence that in-court identifications of the defendants by the witnesses, Mr. Brown, Mrs. Bucensky, and Mrs. Khan were not based upon the lineup identifications, but instead were based solely on the events which occurred during the robbery of Merchants Produce Bank on May 31, 1974. The in-court identification thus having an independent basis other than the line-up should not be suppressed. (Citations omitted.)
We find nothing in the record to indicate that the trial court‘s analysis is clearly erroneous.
The Arrest
Defendant West concedes that, at the time of his arrest, the officer knew West was wanted under a fugitive warrant. There can be little doubt as to the validity of his arrest under these circumstances.
The Search
Hairs were found in one of the wigs recovered by the officers. These were then compared with hairs obtained under a search warrant from the head of the defendant Anderson. The sufficiency of this search warrant is attacked. We find the affidavit for the search warrant amply sets forth sufficient probable cause for the seizure of hair samples of defendant Anderson. See United States v. Harris, 403 U.S. 573, 91 S.Ct. 2075, 29 L.Ed.2d 723 (1971).
Although the trial court sustained Anderson‘s motion to suppress the shoes taken from him following his arrest, the arresting officer was permitted to testify as to his recollection of the appearance of Anderson and the clothing worn by him. There is no rule which bars any witness from testifying as to what he has seen in the public view. See Katz v. United States, 389 U.S. 347, 351, 88 S.Ct. 507, 19 L.Ed.2d 576 (1967).
Judgments affirmed.
James L. Fox, Chicago, Ill., for respondent-appellee.
Before FAIRCHILD, Chief Judge, and CUMMINGS and TONE, Circuit Judges.
TONE, Circuit Judge.
The National Commission on Egg Nutrition (NCEN), a private, not-for-profit corporation composed of representatives of various associations of egg producers throughout the United States, has caused to be published and broadcast statements, in the form of paid advertisements, representing in substance that there is no scientific evidence that eating eggs increases the risk of heart disease or a heart attack. The Federal Trade Commission filed an administrative complaint against NCEN alleging that these statements were false and in violation of
I.
We agree with the District Court that the Commission had jurisdiction over NCEN and the statements in question. Although NCEN is a non-profit corporation, it was formed to promote “the general interests of the egg industry,” according to its articles of incorporation and bylaws. Thus, it comes
“. . . Congress did not intend to provide a blanket exclusion of all non-profit corporations, for it was also aware that corporations ostensibly organized not-for-profit, such as trade associations, were merely vehicles through which a pecuniary profit could be realized for themselves or their members.” 405 F.2d at 1017.
In holding that the Blood Bank was a solely charitable enterprise, the Eighth Circuit distinguished the line of cases following F. T. C. v. Cement Institute, 333 U.S. 683, 68 S.Ct. 793, 92 L.Ed. 1010 (1948), and Fashion Originators’ Guild of America v. F. T. C., 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949 (1941), explaining:
“It is evident, however, that the organizations in the above cases were designed to and did in fact bring together firms having common business concerns and such organizations or their members derived a profit over and above the ability to perpetuate or maintain their existence.” 405 F.2d at 1019.
See also National Harness Mfrs.’ Ass‘n v. F. T. C., 268 F. 705 (6th Cir. 1920). In the instant case, there is sufficient evidence to support the District Court‘s finding that NCEN was organized for the profit of the egg industry, even though it pursues that profit indirectly. The clear purpose of the statements in issue in this case is to encourage the consumption of eggs by allaying fears the public may have about their high cholesterol content. Also, given the nature of the pronouncements in question, the District Court could properly conclude that they were advertisements within the meaning of that term as used in the Act, because they were representations concerning the qualities of a product and promoting its purchase and use. See Koch v. F. T. C., 206 F.2d 311, 317-318 (6th Cir. 1953); compare Scientific Mfg. Co. v. F. T. C., 124 F.2d 640, 643-645 (3rd Cir. 1941).
II.
As the District Court recognized, the Commission invoked
Congress added subsection (b) in 1973, leaving subsection (a) unchanged. By providing the traditional equity standards italicized in the above quota
“. . . all the Commission had to show was a justifiable basis for believing, derived from reasonable inquiry or other credible information, that such a state of facts probably existed as reasonably would lead the Commission to believe that the defendants were engaged in the dissemination of false advertisements . . . in violation of the Act . . . . This is to say, in the instant case, the court had only to resolve the narrow issue of whether there was ‘reasonable cause’ to believe that the alleged violation had taken place.” 191 F.2d at 747-748.
Under this standard, the Commission in the case at bar was entitled to temporary injunctive relief against NCEN‘s advertising statements to the effect that there was “no scientific evidence” of any relationship between dietary cholesterol intake resulting from eating eggs and increased risk of heart disease. The District Court explicitly found that the Commission had demonstrated that it had reason to believe NCEN‘s advertisements to be materially misleading. The Commission also showed that it believed an injunction would be in the best interest of the public, a statement which the District Court credited to the extent that more people were likely to be misled if the pronouncements were permitted to continue. It was error for the District Court to go further than the statutory requirements, which had been satisfied according to Rhodes, by requiring the Commission to justify its request for an injunction on the basis of a balancing of the equities and the likelihood of ultimate success, the traditional equity standards prescribed in
III.
NCEN argues that the issuance of an injunction would at least raise a serious First Amendment question. As Chief Judge Fairchild‘s concurring opinion suggests, the First Amendment is not “wholly irrelevant if government selectively seeks to prohibit commercial advertising because it espoused one side of a genuine controversy.” Cf. Pittsburgh Press Co. v. Human Relations Comm‘n, 413 U.S. 376, 384-389, 93 S.Ct. 2553, 37 L.Ed.2d 669 (1973); Barrick Realty, Inc. v. City of Gary, 491 F.2d 161, 163-164 (7th Cir. 1974); compare Breard v. Alexandria, 341 U.S. 622, 71 S.Ct. 920, 95 L.Ed. 1233 (1951). NCEN has done more than espouse one side of a genuine controversy, however. It has made statements denying the existence of scientific evidence which the record clearly shows does exist. These statements are, therefore, false and misleading. “There is no constitutional right to disseminate false or misleading advertisements.” E. F. Drew & Co. v. F. T. C., 235 F.2d 735, 740 (2d Cir. 1956). The First Amendment problem suggested above is therefore not before us.
IV.
Regardless of the reach of the First Amendment in this area, we think the injunction should not go so far as to prohibit NCEN from making a fair presentation of its side of the controversy. NCEN should, as the Commission contends, be enjoined from disseminating in commerce or by mail advertising containing statements to the effect that there is no scientific evidence that increased intake of dietary cholesterol re
In order to avoid further delay, we are directing that an injunction in the form appearing in the Appendix to this opinion* be entered by the District Court on remand.
Reversed and remanded with directions.
FAIRCHILD, Chief Judge (concurring).
The material involved consists of statements of position with respect to a controversial issue. It is deemed advertising because its dissemination is caused by those whose profit interests are served by the view espoused.
We are in an area of difficulty in considering whether and to what extent the First Amendment protects such material. It is clear that “purely commercial advertising” is treated differently from other communication of information and opinion in terms of applicability of the First Amendment. Valentine v. Chrestensen, 316 U.S. 52, 62 S.Ct. 920, 86 L.Ed. 1262 (1942). Compare, Pittsburgh Press Co. v. Human Rel. Comm‘n., 413 U.S. 376, 384, 93 S.Ct. 2553, 37 L.Ed.2d 669 (1973) with New York Times v. Sullivan, 376 U.S. 254, 266, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964). See also, Breard v. Alexandria, 341 U.S. 622, 71 S.Ct. 920, 95 L.Ed. 1233 (1951). I question whether the cases mean that the First Amendment is wholly irrelevant if government selectively seeks to prohibit commercial advertising because it espoused one side of a genuine controversy.
Mr. Justice Brennan has recently observed:
“. . . while it is possible that commercial advertising may be accorded less First Amendment protection than speech concerning political and social issues of public importance, compare Valentine v. Chrestensen, 316 U.S. 52, 62 S.Ct. 920, 86 L.Ed. 1262 (1942), with Schneider v. State, 308 U.S. 147, 60 S.Ct. 146, 84 L.Ed. 155 (1939), and Breard v. City of Alexandria, 341 U.S. 622, 71 S.Ct. 920, 95 L.Ed. 1233 (1951), with Martin v. City of Struthers, 319 U.S. 141, 63 S.Ct. 862, 87 L.Ed. 1313 (1943), it is ‘speech’ nonetheless, often communicating information and ideas found by many persons to be controversial.” Lehman v. City of Shaker Heights, 418 U.S. 298, 314, 94 S.Ct. 2714, 2723, 41 L.Ed.2d 770 (Brennan, J., dissenting) (Emphasis in original, footnote omitted).
Like political speech, the purveyor of a commercial advertisement has an interest in expression, and the mere fact that government seeks to regulate advertising bespeaks the interest the recipients have in receiving the message. See Note, Freedom of Expression in a Commercial Context, 78 Harv.L.Rev. 1191 (1965). Most importantly, society, as a whole, has a substantial interest in the free interplay of opinion when an advertisement addresses a matter of current public debate.
When we are dealing with a genuine controversy, I do not think that mere reason to believe that a statement is false or misleading is a sufficient basis for an injunction. I conclude that the First Amendment at least requires a higher standard. I can, however, concur in ordering a limited injunction in this
APPENDIX
Injunction Order
Petitioner, the Federal Trade Commission, having invoked the authority of this court pursuant to
The court has jurisdiction over the subject matter and the respondent.
Eggs are a “food” as defined by
The Federal Trade Commission has made a proper showing that it has reason to believe that the respondent‘s advertisements for eggs which have been disseminated in commerce or through the United States mails were false in violation of
The Federal Trade Commission has made a proper showing that the issuance of a temporary injunction against respondent‘s continued dissemination of advertisements which the Commission had reason to believe were false, pending completion of its administrative proceeding with respect to respondent, would be in the public interest.
It is therefore ordered that respondent, National Commission on Egg Nutrition, is forthwith enjoined from disseminating or causing the dissemination of any advertisement by means of the United States mails or by any means in commerce, as “commerce” is defined in the Federal Trade Commission Act, which directly or indirectly:
- Represents that there is no scientific evidence that consuming eggs, even in large quantities, increases the risk of heart attacks, heart or artery disease, or any attendant condition;
- Represents the insignificance of the available scientific evidence that the consumption of eggs may increase the risk of heart attacks, heart or artery disease, or any attendant condition, or represents that there is overwhelming scientific evidence or otherwise misrepresents the amount of scientific evidence, if any, that eating eggs does not increase the risk of heart attacks, heart or artery disease, or any attendant condition;
- Represents that there exists, or describes, scientific evidence which supports the theory that eating eggs does not increase or in any way decreases the risk of heart attacks, heart or artery disease, or attendant conditions, unless such representation is accompanied by a statement that this theory and its supporting evidence are the subject of considerable scientific controversy, and there is much evidence to the contrary.
It is further ordered that respondent shall:
Distribute or mail a copy of this order, within 30 days from the date of this order, to each of its members and to all persons, corporations, associations or other entities to which it has provided advertising materials for publication or republication and which contain any of the claims which respondent is enjoined by this order from making;
Furnish petitioner, within 30 days from the date of this order, with a list of all members, persons, corporations or other entities to whom it has furnished copies of this order as required above; and
Notify the Commission at least 30 days prior to any proposed change in NCEN, such as dissolution, emergence of a successor corporation, or any other change in the corporation which may affect compliance with obligations arising out of this order.
This order shall continue in effect until the pending complaint against respondent by petitioner Federal Trade Commission (F.T.C. Docket No. 8987) is either dismissed by petitioner or until a