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Distributor Rights Case - Precedents that the American Law System is Based on. This is "Dicta"
MLM HISTORY AND LAW
Quick Story….
Holiday Magic and Koscott are two major precedent law cases for MLM. William Penn Patrick, the owner of Holiday Magic, was a charismatic Korean war fighter pilot. After California attacked him for pyramiding – Penn Patrick ran the first really dirty political campaign against the Governor, who he thought “attacked him.” He called the Governor forgetful, insipid and stupid in the campaign that he dumped millions into.
The Governor? Ronald Reagan!
Later, when Penn Patrick was flying his illegally imported F-86 fighter over Costa Mesa, CA, it blew up! To this day some folks blame “All the President's Men”.
84 F.T.C. 748
IN THE MATTER OF
HOLIDAY MAGIC, INC., ET AL.
ORDER, ETC., IN REGARD TO ALLEGED VIOLATION OF SEC. 5 OF THE
FEDERAL TRADE COMMISSION ACT AND SEC. 2(a) OF THE CLAYTON ACT
Docket 8834.
Complaint, Jan. 18, 1971
Decision, Oct. 15, 1974 [FN*]
With respect to respondent Pape, the record clearly compels a finding of individual liability. The record relates that Pape 'took the reins' and 'raised Holiday Magic to even greater heights' while his patron William Penn Patrick ran for the California gubernatorial nomination.
Was there a redeeming feature here? YES!….some for you, and some other info:
FEDERAL TRADE COMMISSION ORDER
I.
It is ordered, That respondent Holiday Magic, Inc., a corporation, Its officers, agents, representatives, employees, successors and assigns, respondent Fred Pape, individually, and respondent Janet Gillespie, individually, their agents, representatives and employees, directly or indirectly through any corporate or other device, in connection with the offering for sale, sale, or distribution of goods or commodities in commerce, as 'commerce' is defined in the Federal Trade Commission Act and in the Clayton Act, shall forthwith cease and desist from:
1. Entering into, maintaining, promoting, or enforcing any contract, agreement, understanding, marketing system, or course of conduct with any dealer or distributor of such goods or commodities to do or perform or attempt to do or perform any of the following acts, practices, or things:
(a) Fix, establish, or maintain the prices, discounts, rebates, overrides, commissions, fees, or other terms or conditions of sale relating to pricing upon which goods or commodities may be resold; Provided, That in those states having Fair Trade laws products may be marketed pursuant to the provisions of such laws.
(b) Require or coerce any person to enter into a contract, agreement, understanding, marketing system, or course of conduct which fixes, establishes, or maintains the prices, discounts, rebates, overrides, commissions, fees, or other terms or conditions of sale relating to pricing upon which goods or commodities may be resold; Provided, That in those states having Fair Trade laws products may be marketed pursuant to the provisions of such laws.
(c) Require or coerce any person to refrain from selling his or her merchandise in any quantity to or through any specified person, class of persons, business, class of business, or retail outlet of his or her choosing.
(e) Require or coerce any person to enter into a contract, agreement, understanding, marketing system, or course of conduct requiring, inducing, or coercing any distributor to refrain from selling any merchandise in any geographic area; Provided, however, That nothing contained herein shall prevent respondents from assigning routes to individual distributors as areas of primary responsibility.
(f) Require or coerce any person to enter into a contract, agreement, understanding, marketing system, or course of conduct which discriminates, directly or indirectly, in the net price of any merchandise of like grade and quality by selling to any purchaser at net prices higher than the net prices charged to any other purchaser who in fact competes in the resale or distribution of such merchandise with the purchaser paying the higher price.
2. Discriminating, directly or indirectly, in the net price, or terms or conditions of sale of any merchandise of like grade and quality by selling to any purchaser at net prices, or upon terms or conditions of sale less favorable than net prices or terms or conditions of sale upon which such products are sold to any other purchaser to the extent such other purchaser competes in the resale of any such products with the purchaser who is afforded less favorable net price or terms or conditions of sale, or with a customer of the purchaser afforded the less favorable net price or terms or conditions of sale.
3. Preventing distributors from entering into consignment agreements or selling their business to another individual.
MLM HISTORY AND LAW
4. Engaging, either as part of any contract, agreement, understanding, or course of conduct with any distributor or dealer of any goods or commodities, or individually and unilaterally in the practice of:
(a) Publishing or distributing, directly or indirectly, any resale price, product price list, order form, report form, or promotional material which employs resale prices for goods or commodities without stating clearly and visibly in conjunction therewith the following statement:
The prices quoted herein are suggested prices only. Distributors are free to determine for themselves their own resale prices.
MLM HISTORY AND LAW
(b) Publishing or distributing, directly or indirectly, any schedule of discounts, rebates, commissions, overrides or other bonuses to be paid by one distributor or class of distributors to any other distributors or class of distributors, without stating clearly and visibly in conjunction therewith the following:
The discounts [rebates, commissions, etc.] quoted herein are suggested only. Distributors are free to determine for themselves any amounts to be paid.
Provided, That in those states having Fair Trade laws products may be marketed pursuant to the provisions of such laws.
MLM HISTORY AND LAW
FOOTNOTE 12 TO FTC CASE
FN12 Witness Ben Gay, a past president of Holiday Magic testifying as to the reaction of William Penn Patrick to the F.T.C. investigation, in Dec. 1969 or Jan. 1970, spoke as follows:
The subject of compromise had come up and that was the theme of his talk. He stood up. He was sitting at the end of the board table. He began shouting and screaming and pounding on the table saying that the next person who so much as uttered the word 'compromise' would be fired and that there would be no compromise with the Federal Trade Commission or any other regulatory agency * * *.
Mr. Patrick and myself were sitting in my office. I was sitting in my office after everyone else had left and when the door shut I looked at him and said, 'compromise,' because he had just said the first person who uttered the word would be fired. Then he laughed and he said, 'What do you mean?' and I said, 'The changes that were suggested are reasonable and valid and they don't make any difference to our business anyway. If the Federal Trade Commission would be happy with them, I say let them have them.' I said, 'I am trying to build a company that will be here 20 years from now,' and he said, 'Let's get something straight. I can steal more money in the next two years than you can make building an organization. It is going to take the Federal Trade Commission at least two years to get us and we are going to proceed on that line,' and he left my office. [Tr. 9841¬44; witness adhered to these words on cross¬ examination, Tr. 10073.]
MLM HISTORY AND LAW
