(7) representing that goods are of a particular standard, grade, quality, style, or model knowing they are not;

(8) making statements of fact concerning (i) the reason for, existence of, or amounts of price reductions, or (ii) savings in comparison to prices of competitors or one's own price, knowing that such statements are false;

(9) representing that goods or services are those of another, knowing they are not;

(10) failing to return or refund a deposit or advance payment for goods not delivered or services not rendered, when no default or further obligation of the person making such deposit or advance payment exists; and

(11) knowingly representing that goods or services have sponsorship approval, origin, characteristics of safety or performance, ingredients, uses, benefits, or quantities that they do not have, or that a person has a sponsorship, approval, status, affiliation, or connection that he does not have: Provided, however, That an affirmation by the supplier merely of the value of the goods or services or a statement of his opinion of the goods or services, or similar statements, which do not take unfair advantage of the level of knowledge, ability, experience, or capacity of the consumer shall not be deemed an unfair or deceptive act or practice within the meaning of this paragraph.

(b) "knowing", "knowingly", and "knowledge” refer to actual knowledge, knowledge presumed where objective circumstances indicate that the supplier acted with knowledge, or knowledge presumed where circumstances indicate that the supplier acted in disregard of reasonable safeguards or care in ascertaining the truth of representations made;

(c) "consumer" means any natural person who is offered or supplied goods or services for personal, family, or household purposes;

(d) "supplier" means any person who makes goods or services available to consumers, either directly or indirectly;

(e) "goods" includes real property, but does not include securities or interests in securities; and

(f) "services" includes insurance services and similar provisions of intangibles, but not the providing of credit.

DECEPTIVE ACTS AND PRACTICES UNLAWFUL

SEC. 202. It shall be unlawful for any supplier to commit any unfair or deceptive act or practice as defined in section 201 of this title.

RESTRAINING VIOLATIONS

SEC. 203. The district courts of the United States have jurisdiction to restrain violations of this title upon application by the Attorney General. The court may at any time grant such injunctive relief as it deems appropriate. Whenever it appears to the court that the ends of justice require that other persons should be parties in the action, the court may cause them to be summoned whether or not they reside in the district in which the court is held, and to that end process may be served in any district.

SUITS BY CONSUMERS ADVERSELY AFFECTED

SEC. 204. When a supplier, (i) in any action brought by the Attorney General under section 203 of this title, has been enjoined from committing any act or practice, whether after final adjudication or by consent decree, or (ii) in any proceeding brought by the Federal Trade Commission under section 5 of the Federal Trade Commission Act with respect to acts or practices alleged to be unfair or deceptive within the meaning of section 201 of this title, has been ordered to cease and desist from that act or practice, and the order shall have become final within the meaning of section 5, either after adjudication or by consent decree, any consumer claiming to have been adversely affected by the act or practice giving rise to such injunction may bring suit against said supplier, and may recover actual damages, and the costs of suit, including reasonable attorneys' fees, and, when appropriate, restitution, reformation, recision, and other equitable relief.

Irrespective of whether an attorney's fee is assessed against a defendant, the court may inquire into the reasonableness of the fee agreed upon between the consumer and his counsel, and revise that fee as the circumstances warrant.

JUDGMENT IN FAVOR OF THE UNITED STATES AS EVIDENCE

SEC. 205. A final judgment or decree rendered in any proceeding brought by the United States under section 203 of this title to the effect that a defendant has engaged in an unfair or deceptive practice within the meaning of this title shall be prima facie evidence against that defendant in any action or proceeding brought by any other person against the defendant under section 204 of this title, as to all matters respecting which said judgment or decree would be an estoppel as between the defendant and the United States: Provided, however, That this section shall not apply to consent judgments or decrees entered before any testimony has been taken.

VENUE

SEC. 206. An action under this title may be brought in any district in which the claim arose or in which the defendant resides, is found, has an agent, is licensed to do business, or is doing business.

LIMITATION OF ACTIONS

SEC. 207. Any proceeding under section 204 of this title shall be brought within one year after the termination of the proceeding under section 203 of this title or the proceeding under section 5 of the Federal Trade Commission Act on which it is predicated.

CIVIL INVESTIGATIVE DEMANDS

SEC. 208. (a) Whenever the Attorney General has reason to believe that any person under investigation may be in possession, custody, or control of any documentary material, or may have knowledge of any fact, relevant to an unfair or deceptive act or practice within the meaning of this title, he may, prior to the institution of a proceeding under section 203, issue in writing, and cause to be served upon such person, a civil investigative demand, requiring such person to produce the documentary material for examination or to answer in writing written interrogatories pertaining to such knowledge.

(b) Each such demand shall—

(1) state the nature of the conduct alleged to constitute the unfair or deceptive act or practice which is under investigation;

(2) describe the class or classes of documentary material to be produced thereunder with such definiteness and certainty as to permit such material to be fairly identified;

(3) propound with definiteness and certainty the written interrogatories to be answered; and

(4) identify the custodian to whom such material shall be furnished, or the person to whom such answers shall be made. (c) No demand shall

(1) contain any requirement which would be held unreasonable if contained in a subpena duces tecum issued by a court of the United States in a proceeding brought under section 203 of this title or if propounded in an interrogatory directed to a defendant in any such proceedings; or

(2) require the production of any documentary evidence, or the disclosure of any information, which would be privileged from disclosure if demanded by a subpena duces tecum issued by a court of the United States, or by an interrogatory propounded, in any proceeding under section 203 of this title. (d) Demand may be served at any place within the territorial jurisdiction of any court of the United States.

(e) The provisions of sections 4 and 5 of the Antitrust Civil Process Act (76 Stat. 549, 551; 15 U.S.C. 1313, 1314) apply to custodians of material produced pursuant to any demand and to judicial proceedings for the enforcement of any such demand made pursuant to this section.

REPORT BY THE ATTORNEY GENERAL

SEC. 209. As part of his responsibility to protect consumers against unfair or deceptive acts or practices, the Attorney General shall annually report to the President and the Congress on the effectiveness of this title.

OTHER LAWS NOT AFFECTED

SEC. 210. This title shall not annul, alter, or affect in any manner the meaning, scope, or applicability of any Federal or State law, including but not limited to laws concerning the provision of goods and services to consumers, or limit in any way the availability of rights or remedies under such law.

[Identical to S. 3092, H.R. 14585, 91st Cong., first sess.]

A BILL To amend the Federal Trade Commission Act to extend protection against fraudulent or deceptive practices, condemned by that Act to consumers through civil actions, and to provide for class actions for acts in defraud of consumers

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Consumer Class Action Act".

SEC. 2. Section 5 of the Federal Trade Commission Act (15 U.S.C. 45) is amended by adding at the end thereof the following:

"(m) Consumers who have been damaged by unfair or deceptive acts or practices in commerce are hereby authorized to bring consumer class actions for redress of such damages. Such actions shall be brought as consumer class actions in accordance with section 4 of the Consumer Class Action Act."

SEC. 3. (1) Congress hereby declares that the protection afforded under the existing Federal Trade Commission Act is not sufficient to prevent unfair and deceptive acts perpetrated against consumers and that consumers should be allowed to sue directly for redress in the case of such practices. Congress therefore finds and declares that class actions are the most effective machinery for redress of consumer rights.

(2) Congress further finds and declares that many substantive rights to protect consumers are established in laws of the States, but there is no remedy by which many persons, each having a small claim, can obtain effective redress under State law. Therefore, it is in the public interest to embrace as Federal law certain State recognized rights and afford a uniform Federal process, by consumer class actions, as an effective remedy.

(3) Congress further finds that the lack of an effective process and remedy in these respects impairs the free flow of consumer goods in commerce and that there is an overriding Federal interest in achieving candor and fair dealing in the marketplace, an interest which, if not protected, clogs the entire economy.

SEC. 4. (a) (1) An act in defraud of consumers which affects commerce is unlawful and the district courts of the United States shall have original jurisdiction without regard to the amount in controversy to entertain civil class actions for redess of such unlawful acts.

(2) For the purposes of this section an "act in defraud of consumers" is(A) an unfair or deceptive act or practice which is unlawful within the meaning of section (5) (a)(1) of the Federal Trade Commission Act, or (B) an act which gives rise to a civil action by a consumer or consumers under State statutory or decisional law for the benefit of consumers. (3) A "consumer" is any natural person who is offered or supplied goods, services, interests in land, or intangibles primarily for personal, family, household, or agricultural purposes.

(b) In the case of any class action brought upon the basis that a deceptive act or practice which is unlawful within the meaning of section 5(a)(1) of the Federal Trade Commission Act has violated consumer's rights, the court shall in construing the terms "unfair or deceptive", give great weight to the interpretation given such terms by the Federal Trade Commission and by the Federal courts in applying section 5(a)(1) of the Federal Trade Commission Act; except that nothing in this Act or the amendments made by this Act, shall be construed to require the court to await administrative action by the Federal Trade Commission before applying Federal law to the facts of the case.

(c) In the case of any class action brought upon the basis of a violation of consumer's rights under any State law the court shall, in deciding such action, apply the following criteria:

(1) State law relating to consumers' rights under State statutory or decisional law is adopted as Federal law.

(2) Federal law applicable to each class shall be fashioned upon the law of the State and State statutory and decisional construction shall be applied

as if jurisdiction of the Federal court were based on diversity of citizenship. (3) In cases of conflict between State statutory and decisional construction and Federal law the latter shall prevail and Federal law governing the case shall be fashioned from State law not in conflict, as near as may be, and from Federal law.

(4) If prior to the date of enactment of this Act, a cause was not subject to removal under section 1441 of title 28. United States Code, the adoption of State law as Federal law by this Act shall not authorize the removal of such a cause on the jurisdictional basis of a Federal question. (d) Whenever a class of consumers prevails in a class action under this Act, including the amendments made by this Act, the court shall award to the attorneys representing such class a reasonable fee based on the value of their services to the class. Attorneys' fees may be awarded from money damages or financial penalties which the defendant owes to members of the class who cannot be located with due diligence except that an attorney's fee may be awarded from damages or relief that the defendant owes to members of the class who cannot be located with due diligence. Such attorney's fees awarded by the court shall not exceed 10 per centum of the total judgment unless failure to award a greater amount would be manifestly unjust and not commensurate with the efforts of counsel.

[S. 3338, 91st Cong., second sess.]

A BILL To amend section 5 of the Federal Trade Commission Act by providing for suits for damages by parties injured by reason of violations of section 5 and for class actions for such damages, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "1970 Amendment to the Federal Trade, Commission Act".

SEC. 2. Section 5 of the Federal Trade Commission Act (38 Stat. 719), as amendment, is hereby amended by adding thereto a new subsection (m) as follows:

"Right of Action of Damaged Parties

“(m) (1) Any person, partnership, or corporation who shall be injured in his business or property by any other person, partnership, or corporation by reason of any unfair method of competition in commerce, or unfair or deceptive acts or practices in commerce forbidden or declared to be unlawful by this section, may sue therefor in any district court of the United States in the district in which the defendant resides or is found, or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee.

"(2) An order to cease and desist of the Commission which has become final as provided in this section to the effect that the defendant in any damage suit has violated the provisions of this section shall be prima facie evidence against such defendant in the damage suit brought by any other party against such defendant under this subsection as to all matters respecting the violation of this section as declared by the Commission.

"(3) Such suits for damages shall be brought within three years from the commission of the unfair methods of competition or unfair or deceptive acts or practices, or in case of a continuing violation from the commission of the last violation, or be forever barred Provided, That the running the three years limitations in respect of each and every private right of action arising under this subsection and based in whole or in part on any matter complained of in the proceedings under this section of the Commission shall be suspended during the pendency of such proceedings and until any order to cease and desist entered therein has become final.

"(4) The several district courts of the United States of America are hereby invested with jurisdiction to receive and proceed with suits under this subsection as in other civil suits in those courts.

"(5) Federal Rules of Civil Procedure for the United States District Courts, rule 23, United States Code Annotated, relating to class actions shall be applicable to actions for damages as provided in this subsection if the prerequisites of rule 23 are satisfied, except as is provided in paragraph 1 of subsection (m) as to the amount in controversy."

[S. 2246, 91st Cong., first sess.]

A BILL To amend the Federal Trade Commission Act, as amended, by providing for temporary injunctions or restraining orders for certain violations of that Act

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Deceptive Sales Act of 1968."

SEC. 2. That section 13 (a) of the Federal Trade Commission Act (15 U.S.C. 53 (a)) be amended as follows:

"SEC. 13. (a) Whenever the Commission has reason to believe

"(1) that any person, partnership, or corporation is engaged in, or is about to engage in, the dissemination or the causing of the dissemination of any advertisement in violation of section 12, or any act or practice in commerce within the meaning of section 5 which is unfair or deceptive to the consumer, and

"(2) that the enjoining thereof pending the issuance of a complaint by the Commission under section 5, and until such complaint is dismissed by the Commission or set aside by the court on review, or the order of the Commission to cease and desist made thereon has become final within the meaning of section 5, would be to the interest of the public,

the Commission by any of its attorneys designated by it for such purpose may bring suit in a distirct court of the United States or in the United States court of any territory, to enjoin such dissemination or the causing of such dissemination or any act or practice in commerce within the meaning of section 5 which is unfair or deceptive to the consumer. Upon proper showing a temporary injunction or restraining order shall be granted without bond. Any such suit shall be brought in the district in which such person, partnership, or corporation resides or transacts business."

APPENDIX B

BULLETIN NO. 12

To all judges concerned with complex and multidistrict litigation.

The Board of Editors met in Dallas, Texas on January 9, 1970 to evaluate several proposed changes and additions to the Manual for Complex and Multidistrict Litigation. A substantial amount of new material will be released to the publishers of the Manual within the next thirty days but because of the urgency and importance of the material relating to the prevention of potential abuses of class actions, the Board directed that this material be promptly distributed to all federal judges. This new material is identified by reference (part, section & page) to its probable location in the Manual. Your comments and suggestions will be greatly appreciated.

Very truly yours,

JOHN T. MCDERMOTT,

Executive Editor.

PART I-SECTION 1.0

Delete subparagraph (k) and insert:

(k) in potential class actions under Rule 23, F.R. Civ. P., (1) establish a schedule for early determination of the class action questions including a schedule for prompt completion of discovery relative to the class action issue; and (2) enter appropriate orders to prevent potential abuse of the class action. Following the last full paragraph of Section 1.6, insert:

1.61 Preventing potential abuse of the class action

The class action under Rule 23 is subject to abuse, intentional and inadvertent, unless procedures are devised and employed to anticipate abuse. Among the potential abuses of the class action processes are the following: (1) solicitation of direct legal representation of potential and actual class members who are not formal parties to the class action; (2) solicitation of funds and agreements to pay fees and expenses from potential and actual class members who are not formal parties to the class action; (3) solicitation by formal parties of requests by class members to opt out in class actions under subparagraph (b)(3) of Rule 23; and (4) unauthorized direct or indirect communications from counsel or a