United States v. Bestline Products Corp.

MEMORANDUM OF OPINION

The United States of America brought this action pursuant to the Federal Trade Commission Act, 15 U.S.C. §§ 45 and 49, to recover civil penalties for alleged violations of a Federal Trade Commission Consent Order to Cease and Desist (“Consent Order”). On September 30, 1974, the Court approved a Final Consent Judgment and Order respecting the corporate defendants. The remaining defendant is William E. Bailey. Both parties have moved for partial summary judgment; these motions were argued extensively at hearings held on September 4, 1975, and December 11, 1975.

I. Factual Background

On July 22,1970, the Federal Trade Commission (“Commission”) notified Bestline Products Corporation and Bestline Products, Inc. (“Bestline”), William E. Bailey, and Robert W. DePew of its intention to issue an administrative complaint against the corporations and against Bailey and DePew, individually and as officers of the corporations. The complaint charged, inter alia, that the multi-level marketing program Bestline utilized in connection with the sale of its household and industrial cleaning products permitted participants to receive compensation for both the sale of Bestline…