Federal Trade Commission v. Simplicity Pattern Company, Inc.

PETITIONER: Federal Trade Commission
RESPONDENT: Simplicity Pattern Company, Inc.
LOCATION: U.S. District Court for the Southern District of New York

DOCKET NO.: 406
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 360 US 55 (1959)
ARGUED: Apr 21, 1959
DECIDED: Jun 08, 1959

Facts of the case

Question

Media for Federal Trade Commission v. Simplicity Pattern Company, Inc.

Audio Transcription for Oral Argument - April 21, 1959 (Part 1) in Federal Trade Commission v. Simplicity Pattern Company, Inc.

Audio Transcription for Oral Argument - April 21, 1959 (Part 2) in Federal Trade Commission v. Simplicity Pattern Company, Inc.

Earl Warren:

Mr. Simon, you may proceed.

William H. Simon:

Mr. Chief Justice, may it please the Court.

In the case of fabric shops, patterns are but a means to the end and the end is the sale of fabrics which are the business of the fabric shops.

Fabric shops generally have a substantial area of their place of business devoted to the sale of patterns.

As the Hearing Examiner found, they invite the women to come in and sit and browse through the pattern catalogues in the hope that when they find a pattern that suits their taste, it will generate a fabric sale, but fabrics to the things they want to sell.

The Red Fronts or 10-cent stores on the other hand sell pattens wholly on their own.

The evidence is they won't carry patterns unless they can sell them at a profit.

And they devote just a small little space on the counter big enough for one catalogue.

A woman stands there and stumps through the catalogue until she finds the pattern she wants, and then the clerk reaches under the counter and hands her -- her pattern.

And when a woman has purchased a pattern in a Red Front store, there is just one thing she can do it, and that's go to some fabric shop and buy some fabric with which to make a dress.

These are the findings of the Hearing Examiner which were later adopted by the Commission, and I quote from page 222 and 223 of the record, “It is quite true that stores of the two groups approach the sale of patterns from widely different view points and that their methods of selling the patterns also differs substantially.

With the 10-cent stores, patterns are handled as any other item of merchandise.”

William J. Brennan, Jr.:

What -- what page is that?

William H. Simon:

Page 220 -- page 22, Mr. Justice Brennan.

I'm sorry.

William J. Brennan, Jr.:

(Inaudible)

William H. Simon:

22, excuse me, sir.

The -- about the 10th line from the bottom, “It is quite true --

William J. Brennan, Jr.:

Yes.

William H. Simon:

-- that the two -- that stores in the two groups approached the sale of patterns from widely different view points that their methods of selling the patterns also differ substantially.

With the 10-cent stores, patterns are handled as any other item of merchandise, that is patterns must stand on their own feet and show a profit, otherwise the store will not handle them.

The patterns are usually kept in a cabinet under the counter and the only thing the perspective customer sees is the catalogue which is a lot of small space on the counter.

No use is made of respondent's monthly fashion previews or any other advertising material.

The situation is quite different with the yardgood store.

Usually, it does not make any profit on patterns nor does it expect to do so.

It handles patterns to promote the sale of fabrics and because its customers expect this service.

The patterns, catalogue, fashion previous and other advertising material are prominently displayed and the customers are invited to sit and browse through the material all in order to create fabric sales.

The record evidence is that something like 90% of the cost of making a garment is in the fabric.

Now, the other costs include the buttons and the accessories and a minor cost for the pattern, but 90% of it is the cost of the fabric.

Three of the Commission's six fabric store witnesses testified they'd like to have a Red Front on either side of them selling fabrics because that would generate selling patterns -- excuse me, so long as they didn't sell fabrics because that would generate fabric sales and two more of the Commission's witnesses said, “We don't regard Woolworth as our competitors because they don't sell fabrics.”