Kidder Oil Co. v. Federal Trade Commission

117 F.2d 892, 1941 U.S. App. LEXIS 4364
CourtCourt of Appeals for the Seventh Circuit
DecidedJanuary 15, 1941
Docket7140
StatusPublished
Cited by10 cases

This text of 117 F.2d 892 (Kidder Oil Co. v. Federal Trade Commission) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kidder Oil Co. v. Federal Trade Commission, 117 F.2d 892, 1941 U.S. App. LEXIS 4364 (7th Cir. 1941).

Opinions

MAJOR, Circuit Judge.

This is a petition to review a cease and desist order of the Federal Trade Commission, (hereinafter called the “Commission”) issued September 19, 1939, in a proceeding had under Section 5 of the Federal Trade Commission Act, 15 U.S.C.A. § 45. The controversy before the Commission, as here, was, in a broad sense, whether colloidal graphite in petitioner’s product, known as “Koatsal,” when added to lubricating oil in internal combustion engines, has the effect of substantially diminishing friction and reducing wear of the engine parts which move upon or against one another.

The issues involved arise from the complaint filed by the Commission, and petitioner’s answer thereto. By the latter’s answer, certain charges of the complaint were admitted and petitioner consented that a cease and desist order be entered in conformity thereto. It will only be necessary, therefore, to refer to the charges of the complaint which were denied by petitioner’s answer. This portion of the complaint is as follows:

“In the course and conduct of its said business, as hereinabove described, respondent, in soliciting the sale of, "and in selling its product, ‘Koatsal,’ by pamphlets, labels attached to containers of the product, letters, post cards, testimonials, advertisements inserted in newspapers, periodicals, and magazines, and otherwise, has made extravagant, deceptive, misleading, and false statements and representations regarding the value, efficacy, and effect of its said product, and the results that are achieved by using it, among which are the following:
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“(b) That ‘Koatsal’ performs amazing feats of lubrication never before possible and utterly impossible by any other method, that it perfects lubrication and is more efficient than any other method because it is scientifically correct;
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“(d) That ‘Koatsal’ penetrates and adheres to all metal surfaces it reaches, ‘actually becomes a part of the metal, permeating the pores * * * literally “soaking” into it,’ that the metal becomes plated with it and that moving parts ride on this plating;
“(e) That ‘Koatsal’ reduces friction as much as 50%, provides perfect protection against burned out bearings 'and makes metal self-lubricating;
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The portion of the cease and desist order now in controversy precludes petitioner, in connection with the offering for sale, sale [894]*894and distribution-of its product “Koatsal,” whether sold under that name or under any other name, from representing:

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“(2) That Koatsal penetrates and adheres to all metal sürfaces it reaches,' permeates the pores of the metal, soaks into the metal, and that the metal becomes plated with Koatsal and moving parts ride on this plating;
“(3) That an automobile conditioned with Koatsal will run 'any greater distance without oil in the crankcase without damage, to any part than will an automobile conditioned with ordinary lubricating oil of the same quality used in Koatsal;
“(4) That the lubricating qualities of Koatsal are any greater than the lubricating qualities of the oil which it contains;
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As is common in cases of this character, the primary question for decision is whether the findings of fact as made by the Commission, upon which the cease and desist order is predicated, are sustained by substantial evidence. Other incidental issues, perhaps not necessary for decision of the main issue, are (1) whether the report made to the Commission by its Trial Examiner, who heard the witnesses, may properly be considered, and (2) whether this court should make certain findings of fact which were proposed to the Commission by the petitioner and which it is claimed were not included in the findings as made. We shall first discuss these incidental issues.

The Trial Examiner made an original report February 1, 1937. Thereafter, additional evidence was taken and the Examiner filed a supplemental report September 16, 1937, neither of which was incorporated in the transcript, certified and filed by the Commission. Upon a supplemental petition filed by petitioner, this court directed the Commission to certify the reports made by the Trial Examiner without prejudice, however, to the right of the Commission to renew its objection to our action in this respect. The reports are here, and it is again contended by the Commission that, under the statute and rules of the Commission, they are no part of the record. The statute, section 5 (c) provides that the Commission “shall certify and file in the court a transcript of the entire record in the proceeding, including all the evidence taken and the report and order of the Commission.” It further provides that the court “shall have power to make and enter upon the pleadings, evidence, and proceedings set forth in such transcript a decree * * *.” Rule 13 of the Commission’s rules, adopted May 21, 1938, provides: “The Trial Examiner’s report upon the evidence is not a decision, finding, or ruling of the Commission. It is not a part of the formal record in the proceeding, and is not to be included in a transcript of the record.” It is pointed out by the Commission that there is no provision in the statute for a report “upon the evidence” by the Trial Examiner, that such report is provided for only by the Commission rule which expressly states that such report is not a part of the record to be included in the transcript, and that, therefore, it is not required. Three cases are cited which it is claimed sustain this position. Algoma Lumber Co. et al. v. Federal Trade Commission, 9 Cir., 56 F.2d 774, Arrow-Hart & Hegeman Electric Co. v. Federal Trade Commission, 2 Cir., 63 F.2d 108, and Federal Trade Commission v. Hires Turner Glass Co., 3 Cir., 81 F.2d 362. In the Al-goma case, the holding was to the effect that it was not incumbent upon the Commission to certify the Examiner’s report unless such report was referred to in the findings of the Commission. That was not done there, nor is it done here, but the court further held that as to whether the Examiner’s report should be subsequently certified, was a matter resting in the Court’s discretion. In the Arrow-Hart case, it was held that the Commission was not required to certify the Examiner’s report unless such report was referred to in the Commission’s finding. In the Hires case, the court denied a request that the Commission be required to certify the report of the Trial Examiner.

The Examiner is an agent of the Commission, appointed, and with authority to conduct the hearing and make a report. It is the practice, as we understand — at any rate it was done in the instant case — when his report is filed with the Commission that a copy be served upon the interested party. Exceptions are, and in this case were, filed to such report. An argument was had befo're, and brief submitted to the Commission in support of the exceptions thus made.

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117 F.2d 892, 1941 U.S. App. LEXIS 4364, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kidder-oil-co-v-federal-trade-commission-ca7-1941.