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tion right. This the Consent Order did not permit, nor can the Court condone.
The Court holds that defendant violated paragraph 6(a) of the Consent Order by failing to inform orally all participants of their three-day cancellation right and by failing to provide for that right in all written contracts of participation.
E. Paragraph 12(a) Paragraph 12(a) of the Consent Order prohibited
 Failing to disclose, orally and in writing, the terms of this order to cease and desist to all present and future distributors, salesmen or other persons engaged in the sale of respondent's products, services, or merchandising programs, and securing from each such distributor, salesmen [sic] or other person a signed statement evidencing receipt of said disclosure. It is the Government's theory that because Bestline's post-Consent Order marketing programs violated other paragraphs of the Order, “it is axiomatic that defendant violated Paragraph 12(a) of the Order." Plaintiff's Motion for Partial Summary Judgment Against Defendant Bailey, at 47. Specifically, the Government maintains that no opportunity meeting script or Bestline Business Opportunity Booklet accurately informed citizens of the conduct prohibited by paragraphs 1, 3, 4, 5, and 6(a) of the Consent Order and, therefore, that defendant has violated paragraph 12(a) as well.17
 The Court does not share the Government's belief that a violation of paragraph 12(a) would follow axiomatically from violations of other pargraphs of the Consent Order. It could have been true that while Bestline's revised marketing programs did not themselves comply with the terms of the Order, all participants were nevertheless accurately and fully apprised of those terms. The Court grants that such a situation would be unusual, but because it is not foreclosed by the circumstances of this case, the Court refuses to hold as a matter of law that a violation of another portion of the Consent Order necessarily implies a violation of paragraph 12(a).
 Turning, then, to the evidentiary materials upon which the Government relies—the opportunity meeting scripts and the Bestline Business Opportunity Booklets—the Court does not feel that the oral disclosure issue can be resolved solely by reference to those materials, for the possibility remains that speakers at the opportunity meetings deviated from the scripts and spoke extemporaneously, or informed participants of the terms of the Order on other occasions. The question
17 The Government does not argue, nor could it in the face of the language of paragraph 12 a), that defendant was obligated to disclose the existence of the Consent Order. Paragraph 12(a) requires only the disclosure of the terms of
of what was told to participants is essentially one of fact, and although the trier of fact would undoubtedly accord substantial weight to the contents of the opportunity meeting scripts, they are an insufficient basis in themselves upon which to found, as a matter of law, a violation of the oral disclosure requirement of paragraph 12(a).
[22,23] As for the written disclosure requirement, defendant relies entirely upon the contents of pages 14 and 15 of the Bestline Business Opportunity Booklets. All Direct and General Distributors acknowledged in writing, in the General and Direct Distributor Agreements, that they had received, read and understood a copy of that Booklet. The record is silent, however, on whether or not Local Distributors were given a copy of the Booklet; it is similarly silent on whether or not participants who were already Direct or General Distributors at the time the Consent Order became effective-and therefore would not have had occasion to contract anew with Bestline-received that Booklet or otherwise acknowledged receipt of a written copy of the terms of the Consent Order. Assuming, though, that all participants received and acknowledged receipt of a copy of the Business Opportunity Booklet, the question remains whether the information set forth therein adequately complies with the requirement of paragraph 12(a) that the terms of the Consent Order be disclosed.
The Court believes that this question must be answered in the negative. Defendant argues that the statement of "Policies and Procedures Affecting Distributors" on pages 14 and 15 of the Booklet “adequately paraphrases” the terms of the Consent Order. Defendant Bailey's Memorandum in Opposition to Plaintiff's Motion for Partial [781) Summary Judgment, at 70. Defendant, of course, was not obligated by paragraph 12(a) to quote the terms of the Consent Order verbatim in the written disclosure to participants. However, by paraphrasing those terms he assumed the risk that the language employed would fail, as a matter of law, adequately to inform participants of those terms. The Court concludes that this occurred. For example, on page 14 of the Bestline Business Opportunity Booklet used during the second revised marketing program, participants were told that:
Under certain conditions, and in accordance with the provisions of this agreement, a distributor shall have the option to, at any time within three months after the date of receipt of order, return the unused portion, undamaged, of his initial inventory to Bestline Products, Inc., for refund. Further details concerning refunds may be obtained from Bestline's Corporate Offices in San Jose, California.
Presumably, this passage was intended to paraphrase the 90-day refund requirement of paragraph 4 of the Consent Order. Omitted, however, is any reference to the fact that once inventory costs reached
$500 or more within the 90-day period, Bestline's obligation under the Consent Order to repurchase unused inventory immediately ceased upon a participant's subsequent purchase of product. In view of the split purchase procedure for Candidate Direct Distributors adopted under the second revised marketing program, discussed in footnote 13, supra, the limited disclosure on page 14 of the terms of the 90-day refund provision is inadequate. Other instances of inadequate disclosure could be mentioned, as, for example, the omission from the Bestline Business Opportunity Booklet utilized prior to February, 1972, of any explicit mention that no consideration would be paid for the recruitment of others into the Bestline marketing program. In sum, the careful, guarded language contained on pages 14 and 15 of the Booklet, even if distributed to all participants in the program, fails to satisfy the written disclosure requirement of paragraph 12(a). Accordingly, the Court holds that defendant did not comply with that portion of the Consent Order.
To recapitulate, the Court holds that:
1. Defendant violated paragraph 1 of the Consent Order by operating a marketing program from November 3, 1971, to July 31, 1973, wherein the financial gains to participants were dependent upon recruitment of other participants;
2. Defendant violated paragraph 3 of the Consent Order by operating a marketing program from November 3, 1971, to July 31, 1973, wherein consideration was paid to participants who did not perform a bona fide and essential supervisory, distributive, selling or soliciting function in the sale and delivery of product to the ultimate consumer;
3. Defendant violated paragraph 4 of the Consent Order by requiring Direct Distributor participants to pay monthly co-op dues of $25 during the period November 3, 1971, to February 29, 1972;
4. Defendant violated paragraph 4 of the Consent Order from November 3, 1971, to July 31, 1973, by requiring Direct Distributors who wished to ascend to General Distributor to make payments to the General Training Fund;
5. Defendant violated paragraph 4 of the Consent Order from November 3, 1971, to February 29, 1972, by allocating $441 of the sum paid by a pre-purchase Direct Distributor for administrative and processing costs;
6. Defendant violated paragraph 6(a) of the Consent Order from November 3, 1971, to July 31, 1973, in that all participants were not orally informed that all contracts of participation could be cancelled within three working days from the date the contract was executed;
7. Defendant violated paragraph 6(a) of the Consent Order from March 1, 1972, to July 31, 1973, in that all contracts of participation did not provide that the contract could be cancelled within three working  days from the date the contract was executed; and that
8. Defendant violated paragraph 12(a) of the Consent Order during the period November 3, 1971, to July 31, 1973, by failing to disclose in writing to all participants the terms of the Consent Order.
 It may well be that none of these violations were willful or deliberate, but that defendant attempted in good faith to comply with all of the terms of the Consent Order and simply misunderstood both the scope of the Order and his obligations thereunder. The Court, of course, will not prejudge those issues; however, they concern matters which are relevant only in the determination of the severity of the penalty to be imposed. They cannot excuse defendant's extensive and continued non-compliance with the Commission's Order. Accordingly,
IT IS HEREBY ORDERED that defendant's motion for partial summary judgment is denied.
IT IS HEREBY FURTHER ORDERED that the Government's motion for partial summary judgment with respect to paragraph 5 of the Consent Order is denied.
IT IS HEREBY FURTHER ORDERED that the Government's motion for partial summary judgment with respect to paragraphs 1, 3, 4, 6(a) and 12(a) of the Consent Order is granted as hereinabove set forth.
FEDERAL TRADE COMMISSION v. RALPH H. MILLER, BILL R. PRIVITT, and MORGAN DRIVE AWAY, INC.*
Civil No. S 75–106.
F.T.C. File No. 124 3125.
(United States District Court, Northern District of Indiana,
South Bend Division, April 14, 1976) On petition for subpoena enforcement, court held that despite F.T.C. Act exemption of common carriers subject to Interstate Commerce Act, F.T.C. was entitled to subpoena enforcement in connection with preliminary investigation, where necessary documentary evidence of possible violations of the Act can only be obtained by subpoena; jurisdictional issue, raised as defense, was premature at preliminary investigation stage; and administrative agency has Congressional authority to determine jurisdiction in preparatory search for violations.
The Federal Trade Commission has petitioned this court, pursuant to Section 9 of the Federal Trade Commission Act (15 U.S.C. & 49) and Section 16 of said Act (15 U.S.C. § 56) as amended by P.L. 93-637, $8 203–204 (Jan. 4, 1975), for an order requiring Respondent Morgan Drive Away, Inc., and its officers to testify and produce books, papers, documents, and other materials in accordance with its subpoena duces tecum and subpoena ad testificandum issued on 4 February 1974, in connection with an investigation to determine whether respondent is engaged in unfair or deceptive acts or practices in violation of $ 5 of the Federal Trade Commission Act by misleading advertising or misrepresentations involving the solicitation of persons to become owner-operators in the nationwide mobile home transporting industry. This action is prompted by respondents' refusal to appear in response to the subpoenas after their motion to quash or limit the subpoenas was denied by petitioner.
The FTC maintains initially that its subpoena should be enforced since the investigation is within its broad statutory authority to compel testimony and the production of documentary evidence relating to any matter under investigation. This proposition, it is argued, has received uniform support in the courts, unless the evidence sought is clearly irrelevant and immaterial. F.T.C. v. Standard American, Inc., 306 F. 2d 231, 234 235 (3rd Cir. 1962). Second, the FTC argues that the
• Not reported in Federal Reporter. Reported in Trade Reg. Rep. 160,926 at 69,083.