Federal Trade Commission v. Mary Carter Paint Company

PETITIONER: Federal Trade Commission
RESPONDENT: Mary Carter Paint Company
LOCATION: Juvenile Court

DOCKET NO.: 15
DECIDED BY: Warren Court (1965-1967)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 382 US 46 (1965)
ARGUED: Oct 21, 1965
DECIDED: Nov 08, 1965

Facts of the case

Question

Media for Federal Trade Commission v. Mary Carter Paint Company

Audio Transcription for Oral Argument - October 21, 1965 in Federal Trade Commission v. Mary Carter Paint Company

Earl Warren:

Number 15, Federal Trade Commission petitioner versus Mary Carter Paint Company. et al.

Mr. Lewin.

Nathan Lewin:

Mr. Chief Justice, may it please the Court.

This Federal Trade Commission case, which is here in on writ of certiorari to the Court of Appeals for the Fifth Circuit presents the question whether respondent's use of the word ‘free’ in its advertising slogans was properly held by the commission to amount to a deceptive practice within the meaning of Section 5(a) of the Federal Trade Commission Act.

The critical facts are undisputed and I shall state them briefly.

Respondent began manufacturing various kinds of paints and selling it under the trade name Mary Carter in about 1950 and it now distributes its products to the public as it has done in the past through wholly owned and franchise retail stores in the Southern and Eastern sections of the country.

The company has been resoundingly successful.

It grew at a great rate in the first decade of its existence concededly because of the effectiveness of the advertising slogans and sales policy which had been advertised which is at issue here.

Respondent's own officers in the testimony before the Federal Trade Commission called it the keystone of respondent's advertising policy.

It has been so successful that in five years from 1955 to 1960 its total sales increased from slightly over $1 million annually to more than $12 million.

The disputed policy is as follows.

Respondent packages its paint in quart and gallon cans, but it sells to the public on terms which are succinctly stated in its two most commonly used advertising slogans, “Buy one get one free” or “Every second can of paint free”, occasionally they add to that the words “of extra cost”.

Consumers are told in other words that a single quart can of Mary Carter paint sells for 225, that's the usual price most of the quart cans, but that a free can, “free” is given with every can that's purchased for 225.

Similarly, respondent represents that the price of most of its one gallon cans is 698, but that a second can will be “Given free” with every 698 purchase.

On these facts, the Federal Trade Commission after appropriate proceedings found with one member dissenting that the use of the word free violated Section 5 and that it impliedly misrepresented the customary and usual retail price of Mary Carter paint and it entered a cease and desist order.

The Court of Appeal disagreed and they entered an order directing the commission to dismiss the complaint.

I should like to turn first to the question of deception, which troubled the dissenting commissioner and the majority of the Court of Appeals and more particularly to the broader issue whether even if Mary Carter makes its entirely clear on its advertisements that this is a consistent sales policy buy one get one free or every second can free, the use of the word free is deceptive.

I should say at the outset that we accept for purposes of this case Mary Carter's claim that it consistently directed its retailers, franchise dealers and wholly owned retail outlets not to sell a single can of paint at less than 698 or 225.

In other words that these dealers were instructed that two cans of paint and one can of paint should bear the same price.

The question is whether under these circumstances the commission could find that it was deceptive to call the second can free.

Now there can hardly be any doubt I would think that the word free or any language carrying that kind of meaning is a very potent attraction to consumers and buyers.

It makes them buy maybe out of what Judge Brown and his concurring opinion call a habit of self delusion as to free products.

If buyers are likely to be mislead by Mary Carter's use of the word free into thinking that they are being given a bonus that they are not actually receiving and if they then buy that can or that product of paint rather than a competing product because of that reason, the representation if it is false or misleading may certainly be prevented by the commission.

The representation is misleading in this case we submit simply because the word free as used by Mary Carter means nothing more that the company is chosen to call one can of a two can package free and has chosen to attach to the other cans the full retail sales price.

If it's sales policy is stripped of the Mary Carter slogan, then it's obvious that what all that the company is doing is it's selling paints in combination packages of two cans and it is charging for the two cans what is in effect a two can price.

Potter Stewart:

So it would be relevant as to what paint of equal quality, sold a competitive paint of equal quality, but it’s sold for whether it was around about $2.25 a quart or whether it was closer $4 a can or a $1.15?

Nathan Lewin:

No, Mr. Justice Stewart.

In the commission's opinion and we submit that was right, the quality of the paint was irrelevant.

The commission examiner excluded testimony regarding --

Potter Stewart:

I was asking about the price for paint of competitive quality?