In the Matter of the Complaint Against

KINGSBRIDGE MEDIA & MARKETING, INC.
6835 Valjean Avenue
Van Nuys, CA 91406-4713, et al.

P.S. Docket No. 20/17

Cohen, James A.

APPEARANCE FOR COMPLAINANT:
Nan M. Kalthoff, Esq.
Consumer Protection Division
Law Department
United States Postal Service
Washington, DC 20260-1112

APPEARANCE FOR RESPONDENTS:
Dennis M. Gronek, Esq.
Dilling, Dilling, and Gronek
150 N. Wacker Drive Suite 1242
Chicago, IL 60606-1606

POSTAL SERVICE DECISION

Respondents have appealed from an Initial Decision of an Administrative Law Judge which holds that Respondents are engaged in conducting a scheme for obtaining money or property through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.

Background

The Consumer Protection Division, Law Department, United States Postal Service (Complainant), initiated these proceedings by filing a Complaint alleging that Respondents make the following materially false representations relating to their product "Dream Away":

(a) Dream Away causes the user to lose weight while sleeping.

(b) Dream Away causes the user to lose weight.

(c) Dream Away causes the user to lose fat.

(d) Dream Away causes the user to lose weight without restricting his or her accustomed calorie intake (i.e., dieting) or exercising.

(e) Dream Away causes the user to lose weight at the rate of two pounds in one day, seven pounds in one week, 10 pounds in two weeks, 16 pounds in 30 days, 18 pounds in three weeks, and twenty pounds in 30 days.

(f) Dream Away causes the user to lose a substantial amount of weight in a short period of time.

(g) Dream Away promotes muscle development in the user.

(h) Dream Away stimulates the release of human growth hormone and thereby promotes muscle growth and repair.

(i) Obese persons are likely to have a deficiency of the human growth hormone.

(j) Dream Away stimulates the release of the human growth hormone and thereby causes a loss of fat.

(k) Dream Away causes an increase in the user's muscle tissue without exercise.

(l) The human growth hormone burns fat.

(m) Use of Dream Away makes a significant contribution to a loss of weight when used in conjunction with exercise.

(n) Use of Dream Away makes a significant contribution to a loss of weight when used in conjunction with diet.

In a timely filed Answer, Respondents denied that they make the representations alleged in the Complaint and that those representations are materially false. At a hearing before an Administrative Law Judge, both parties presented evidence in support of their respective positions. Following the filing of Proposed Findings of Fact and Conclusions of Law, the Administrative Law Judge found that Respondents make the representations alleged in the Complaint and that those representations are materially false in violation of 39 U.S.C. § 3005.

Respondent's Exceptions to the
Initial Decision

Respondents have filed eighteen numbered exceptions with supporting arguments for some, but not all, of the exceptions. The entire record has been reviewed and all of Respondents' exceptions have been considered on appeal. The exceptions have been combined where appropriate and are discussed hereafter.

Exceptions 1, 2 & 3 to Findings of Fact

Respondents' first three numbered exceptions are to Findings of Fact 3, 4 and 5 of the Initial Decision which relate to the promotional materials used by Respondents. No arguments have been presented by Respondents in support of these exceptions. Nevertheless each exception has been considered. Finding of Fact 3 which states that Respondents used the pamphlet entitled "The Secrets of Dream/Away/The Amino Acid Diet/Lose Weight While You Sleep Naturally" in conjunction with a reorder form to obtain remittances through the mail, is fully supported by the evidence, including paragraph 5 of the stipulation of the parties. Similarly, the evidence supports the finding that Respondents used a letter on Nutrimarketing letterhead to solicit remittances of money through the mail for Dream Away (I.D. FOF 4), and the finding that Respondents used the first televised commercial to promote the sale of Dream Away (I.D. FOF 5). Accordingly, there is no merit to Respondents' exceptions to Findings 3, 4 and 5.

Exceptions 4 through 11 to Findings of Fact
and Exceptions 1, 2 and 4 to Conclusions of Law

By these exceptions, Respondents challenge Findings of Fact 12 through 19 and Conclusions of Law 2, 3 and 7 of the Initial Decision which state that Respondents' advertising materials make the representations alleged in the Complaint.

The Administrative Law Judge concluded that, considering Respondents' promotional materials in their entirety, the ordinary reader and viewer would interpret them substantially as characterized in the Complaint. As summarized in the Initial Decision (pp. 7-17), there is ample evidence in the record to support the Administrative Law Judge's findings and conclusions that the ordinary reader and viewer would understand Respondents' advertising materials to make the representations alleged in the Complaint.

Respondents dispute the findings that their advertisements represent to the ordinary reader and viewer that the product Dream Away causes the user to lose weight while sleeping, that it causes the user to lose weight and fat, and that the Dream Away tablets alone will achieve these results. Respondents argue that their promotional materials refer to a diet plan rather than merely to tablets.

The Administrative Law Judge correctly found that the word "plan" as used in Respondents' advertisements is insufficient to alert ordinary viewers and readers to the requirement for a calorie-restricted diet and/or exercise in order to achieve the represented results. This finding is supported by the language of Respondents' advertising materials which emphasizes the use of the tablets and conveys the impression to the ordinary reader or viewer that the plan consists of following directions for taking the tablets, not the necessity for a diet and/or exercise program.

Respondents argue that disclaimers in their advertisements place the ordinary reader or viewer on notice that diet or exercise would be required. However, to be effective, a disclaimer must be clear, and not obscured or contradicted by other advertising statements. Vibra Brush Corp. v. Schaffer, 152 F. Supp. 461, 465 (S.D.N.Y. 1957), Rev'd on other grounds, 256 F.2d 681 (2nd Cir. 1958); Gottlieb v. Schaffer, 141 F. Supp. 7, 17 (S.D.N.Y. 1956). In the context of the two minute commercials showing positive-sounding testimonials, the brief and difficult- to-read disclaimer across the lower part of the screen's image is ineffective. See Kurzon v. United States Postal Service, 539 F.2d 788 at 794 (lst Cir. 1976); N.E.S.T., Inc., P.S. Docket No. 14/89 (P.S.D. Aug. 7, 1984) at p. 7; The New Body Boutique, Inc., P.S. Docket No. 10/169 (P.S.D. July 7, l982) at pp. 15-16. It is doubtful that the disclaimer, barely perceptible to even the most alert viewer, would be comprehended by the vast majority of viewers. Even if comprehended, the message "Individual weight loss varies. Results may be achieved through reduced caloric diet and exercise," would be ineffective to counteract or modulate the overall impression that the use of the tablets would cause the weight loss represented in the commercials.

Respondents also argue that testimonials in their advertising materials should not have been considered to be representations. The Administrative Law Judge correctly found that the testimonials constitute representations. See Porter & Dietsch, Inc. v. F.T.C., 605 F.2d 294, 303 (7th Cir. 1979); Natural Imports, P.S. Docket No. 1/116 (I.D. Jan. 3, 1973) at p. 7; cf. Fort Morgan Vapor Jet, P.S. Docket No. 12/64 (P.S.D. Sept. 29, 1982) at pp. 14-15. The obscure disclaimer "Individual Weight Loss Varies" does not detract from the overall impact of the testimonials which describe such weight losses as "I lost over seven pounds the very first week," "I lost eighteen pounds in just three weeks," and "I lost ten pounds in two weeks."

Additionally, contrary to Respondents' arguments, a promise of a refund will not dispel the effect of a false representation. Farley v. Heininger, 105 F.2d 79, 84 (D.C. Cir. 1939), cert. denied 308 U.S. 587; Borg-Johnson Electronics, Inc. v. Christenberry 169 F. Supp 746, 751 (S.D.N.Y. 1959); The Robertson-Taylor Co., P.S. Docket No. 16/98 et. al (P.S.D. March 31, l986) at p. 44; Electronic Development Lab, P.S. Docket No. 18/157 (P.S.D. On Recon. Nov. 8, 1985) at p. ; The New Body Boutique, Inc., P.S. Docket No. 11/95 (P.S.D. on Recon. Jan. 12, l983) at p. 5.

Respondents' argument that the Administrative Law Judge erred in considering the representations contained in discontinued commercials also lacks merit. It has been established that:

"voluntary cessation of allegedly illegal conduct does not deprive the tribunal of power to hear and determine the case, i.e., does not make the case moot. Citations omitted . . . . The defendant is free to return to his old ways. This, together with a public interest in having the legality of the practices settled, militates against a mootness conclusion." United States v. W. T. Grant Co., 345 U.S. 629, 632 (1953); see also Sharon Woodman Associates, P.S. Docket No. 2/122 (P.S.D. Feb. 12, 1974); Vanguard Williams Associates, P.S. Docket No. 6/31 (I.D. 1979).

To apply Respondents' theory would frustrate the purpose and intent of 39 U.S.C. § 3005, particularly as it was amended in 1983 by P.L. 98-186, 97 Stat. 1315 to include cease and desist authority. See Electronic Development Lab, P.S. Docket No. 18/157 (P.S.D. Sept. 6, 1985) at pp. 5-6.

Exceptions 12, 13 & 14 and Exception 3
to Conclusions of Law

In connection with these exceptions, Respondents take issue with the Administrative Law Judge's evaluation of the testimony of the expert witnesses and his conclusion that the representations alleged in the Complaint are false. Specifically, Respondents except to Findings of Fact 20, 21 and 22, and to Conclusion of Law 5 of the Initial Decision in which the Administrative Law Judge stated that Complainant's expert witness was exceptionally well-qualified to testify and that Respondents' experts lacked requisite expertise and that their testimony should be accorded little weight. According to Respondents, the testimony of Complainant's expert contains distortions and inconsistencies which make it substantially less reliable than the testimony of Respondents' experts.

As Respondents point out, there are some inconsistences in the testimony of Complainant's expert. Nonetheless, a review of the respective qualifications of the witnesses and the substance of their testimony, supports the Administrative Law Judge's reliance on the testimony of Complainant's expert.

Respondents also contend that the representations alleged in the Complaint were not proven to be false. Respondents argue that Complainant failed to sustain its burden of proof because it failed to introduce any studies, and its expert witness was unaware of any studies, which establish that the combination of amino acids in Dream Away do not contribute to, or cause, weight loss.

Expert opinion testimony need not be based on personal knowledge or testing of a specific product or studies proving that a product will not cause, or contribute to, the results represented. The falsity of a representation may be based on an expert's overall knowledge, his opinion as to the probability of something occurring or existing and the informed medical and scientific consensus. Reilly v. Pinkus, 338 U.S. 269, 274 (1949); Original Cosmetics Products, Inc. v. Strachan, 459 F. Supp. 496, 503 (S.D.N.Y. 1978); Athena Products, Ltd., P.S. Docket No. 7/99 (P.S.D. June 26, 1981); Eden Valley Nursery Sales, P.S. 7/23 (P.S.D. Feb. 15, 1980). In this case, a preponderance of evidence consisting primarily of the opinion of Complainant's expert witness and the consensus of informed medical and scientific opinion establishes that the product Dream Away will not perform as claimed. Certain contrary views expressed by Respondents' witnesses were not shown to represent a consensus of informed medical opinion and did not persuasively rebut the informed medical and scientific consensus and the opinion of Complainant's expert.

Respondents cite various articles which they allege support their position. The articles relied on by Respondents fail to support the proposition that the ingestion of the amino acids contained in Dream Away causes or aids weight loss. The evidence does reflect a recognition that growth hormone may be released with the administration of large doses of amino acids (I.D. p. 23). The studies, however, do not support the proposition that an amino acid formulation with the small amounts contained in the product Dream Away would alone produce any changes in growth hormone secretion (I.D. p. 23). One study relied on by Respondents, referred to as the Isidori study, is supportive of an increase in growth hormone secretion when a combination of relatively small amounts of the amino acids arginine and lysine, which would approximate those in Dream Away, if taken with skim milk after a four hour fast. This study, which was found by the Administrative Law Judge to be of questionable validity, measured only growth hormone release, not weight loss (I.D. pp. 23-24). Even if the probative value of the study was established, the record would not support a finding that the representations alleged in the Complaint are true (I.D. pp. 25-27). Although increased secretion of growth hormone can result in fat mobilization whereby fatty acids are released from fat depots, it does not follow that the fat would be "burned" or oxidized. If not needed for energy, the fat would simply be reconstituted in the liver and sent back to fat depots (I.D. pp. 24-25). Respondents' reliance on this study overlooks the critical distinction between fat mobilization and fat oxidation, or weight loss (I.D. pp. 24-25). Thus, the evidence of record is persuasive that the product Dream Away will have no effect on weight or fat loss.

Conclusion

After consideration of the entire record and Respondents' exceptions, it is concluded that Respondents' advertising materials make the representations alleged in the Complaint and that those representations are materially false in violation of 39 U.S.C. § 3005. Accordingly, Respondents' appeal from the Initial Decision is denied and the orders authorized by 39 U.S.C. § 3005 are issued herewith.