H.E. Docket No. 3/201
December 28, 1959
In the Matter of the Complaint That )
)
OGLESBY CHEMICAL COMPANY )
OGLESBY CHEMICAL CO., )
D. E. OGLESBY, GENERAL MANAGER, and )
LIX-PAIN )
) H.E. Docket No. 3/201
at )
)
Kinston, North Carolina, )
)
are engaged in conducting a scheme for )
obtaining money through the mails in )
violation of 39 U.S. Code 259 and 732. )
APPEARANCES:
John G. Dawson, Esq. and
William A. Allen, Jr., Esq.
Kinston, North Carolina, and
Frank J. Delany, Esq.
Washington, D. C. for the respondent.
Richard S. Farr, Esq.
Assistant General Counsel,
Post Office Department,
for the complainant.
Ablard, Charles D.
POST OFFICE DEPARTMENT Washington 25, D. C.
DEPARTMENTAL DECISION
On May 9, 1955, a complaint was issued by the Assistant Solicitor, Fraud Division, of the Post Office Department 1/ charging the respondent, Oglesby Chemical Company of Kinston, North Carolina, with conducting a scheme for obtaining remittances of money through the mails by false and fraudulent pretenses in the sale of a liniment called Lix-Pain. The complainant seeks the issuance of a fraud order prohibiting the respondent company from receiving mail connected with the unlawful enterprise and cashing postal money orders. After the respondent filed a motion to strike a portion of the original complaint for ambiguity and vagueness, a substituted complaint consisting of more detailed and specific charges than the original was filed by the complainant on August 10, 1955.
On August 29, 1955, the respondent filed a motion to dismiss which was denied by the Hearing Examiner. The respondent appealed this ruling to the General Counsel of the Post Office Department, the officer then designated by the Postmaster General to render final decisions in administrative proceedings. The General Counsel denied the respondent's motion to dismiss holding that preliminary motions and rulings are not final orders and are not appealable to the agency. The matter then proceeded to a hearing from February 28, 1956, through March 1, 1956, before Hearing Examiner Edward Carlick at Raleigh and Kinston, North Carolina.
The Hearing Examiner rendered an initial decision in which he found that the representations in the advertising of the respondent were as alleged in the substituted complaint and that these representations were false but that the complainant had failed to prove that the respondent intended to deceive and that the complaint should be dismissed. The complainant appealed this ruling to the General Counsel who reversed the finding of the Hearing Examiner on the last point and issued a fraud order pursuant to 39 U.S.C. 259 and 732. The complainant then sought to enjoin the enforcement of the fraud order in the United States District Court for the Eastern District of North Carolina. Sometime after the issuance of the fraud order on July 18, 1957, the United States Court of Appeals for the Second Circuit held that the Post Office Department procedures were not in accord with the Administrative Procedure Act, 5 U.S.C. 1001 et seq., because of commingling of the prosecutive and adjudicative functions. After this decision, the office of the Postmaster General was reorganized and a Judicial Officer was established to review administrative proceedings for the Postmaster General and make final agency decisions. (23 F.R. 2817, April 26, 1958)
The parties to the proceeding in the Eastern District of North Carolina, with the approval of District Judge Edwin M. Stanley, agreed on July 14, 1959, to remand this proceeding to the Post Office Department for purpose of giving the parties a new opportunity to appeal from the initial decision in accordance with the new appellate procedure of the Department. The fraud order outstanding against the respondent was then rescinded and both parties filed appeal briefs excepting to the initial decision of the Hearing Examiner. The complainant excepts to his finding as to intent to deceive and the respondent excepts to his finding in regard to the construction placed on the advertising, the finding of falsity and several procedural rulings.
Lix-Pain is a cream liniment containing ammonium carbonate, camphor, turpentine, thyme, and lanolin. The complainant introduced several types of advertising used in the sale of Lix-Pain: (1) an advertisement which appeared in magazines and periodicals of one column width portraying the sketch of a male face (Appendix A); (2) a blue pamphlet of six pages (Appendix B); (3) a variety of form letters and other 8 1/2 x 11 sheets which have been reproduced by printing or other reproductive processes.
The substituted complaint alleges that the respondents are representing to the public in substance and effect:
"a. That 'Lix-Pain' constitutes an adequate remedy and treatment 'For Relief of ARTHRITIS -- NEURITIS -- RHEUMATISM -- BACKACHE -- HEADACHE' for any user thereof;
b. That 'LIX-PAIN' will give 'immediate relief', i.e., that 'LIX-PAIN' constitutes an adequate and complete cure or remedy 'For sprains, arthritis ... backache, headache, swollen glands ... rheumatism, bruises' for any user thereof;
c. That any user of 'Lix-PAIN' will obtain results similar to those set forth in the purported testimonials for said product, and to wit:
(i) That 'LIX-PAIN' brings wonderful relief from 'Sinus, Bronchial Asthma and Arthritis; it is excellent for Rheumatism and Sore Throat';
(ii) That by the use of 'LIX-PAIN' any person who has 'sprained and bruised' an ankle will be able to walk again 'the next morning', and that 'LIX-PAIN' should be used 'for Swollen Glands, Backache, Headache ... Sinus';
(iii) That any person who has a spine which has grown together and 'RHEUMATIC ARTHRITIS OF THE JOINTS, ARMS, hands and knees' will be able to resume work and 'DRIVE (an automobile) in COMFORT WITHOUT PAIN';
(iv) That 'LIX-PAIN' can and will by the use thereof give relief and constitute an adequate treatment 'for an Ear Ache' thus saving doctor bills, time and other expense;
(v) That any arthritic person who has been unable to 'SLEEP FOR TERRIBLE PAIN IN (a) HIP AND LEG will AFTER USEING LIX-PAIN be enabled to SLEEP SOUNDLY ALL NIGHT';
(vi) That any sufferer from arthritis will, by the use of 'LIX-PAIN', have 'REMARKABLE relief from nagging PAINS OR ARTHRITIS AND NEURITIS';
(vii) That any person afflicted with diabetes who suffers 'severe neuritis' requiring the use of 'A CANE TO WALK' will, by the use of 'LIX-PAIN', be able to walk without a cane';
(viii) That any person who can 'HARDLY WRITE A LETTER OR DO ANY NEEDLE WORK', who is unable to 'GET OUT' of the house because of swollen and painful ankles, and is unable to use their fingers, will, by the use of 'LIX-PAIN' obtain 'RELIEF' and begin 'TO IMPROVE AT ONCE' so as to be able to 'WALK AND HAVE GOOD USE OF their FINGERS and CAN SEW AND CROCHET';
(ix) That any person who has theretofore been unable to walk with ease and go up and down stairs because of swollen and painful knees, will, by the use of 'LIX-PAIN', get relief from such condition 'FROM THE FIRST APPLICATION' and in a few days, the swelling will go away and the knees will come 'BACK TO NORMAL SIZE' and any such person will thereby be enabled to 'WALK WITH EASE GO UP AND DOWN STAIRS'."
The complaint alleges that these representations are false.
Construction of the Advertising
The first question for determination is whether the advertising of the respondent has been properly construed by the complainant or whether, as the respondent asserts, all that is represented by the advertising matter is that Lix-Pain gives relief for pain caused by the various enumerated diseases and malfunctions.
In interpreting advertising the Supreme Court said in Donaldson v. Read Magazine, 333 U.S. 178 (1947) that the advertisement as a whole must be considered and not isolated parts. The ultimate impression upon the mind of the reader arises from not only what is said but all that is reasonably implied. The law is not made for experts in advertising media but to protect the public - the vast multitude which includes the ignorant, the unthinking and the credulous who do not stop to analyze but too often are governed by appearances and general impressions. 2/ Advertisements must be considered in their entirety as they would be read by those to whom they appeal. 3/
The respondent contends that only the periodical advertising and the blue flyer are used regularly by him and that, therefore, any finding must be based solely on this advertising. The complainant proved that the form letters and other advertising were used by the respondent. In Moretrench Corporation v. Federal Trade Commission, 127 F.2d 792 (C.A. 2, 1942), Judge Learned Hand upheld a Federal Trade Commission cease and desist order even though it was based on an "obscure" and "insignificant" advertisement. Having proved that the advertising matter was used I see no reason why it must be ignored as the respondent requests.
The respondent concedes that Lix-Pain does not afford a cure or effective remedy for arthritis, rheumatism, neuralgia, asthma and the other ailments mentioned in the advertisement but contends that the advertisement does no more than represent Lix-Pain as a product which gives relief for pains caused by the various ailments. the effect of specific words in interpreting advertising has been the subject of a lengthy line of decisions of the Court of Appeals of the Seventh Circuit. In D. D. D. Corporation v. Federal Trade Commission, 125 F.2d 679, 681 (C.A. 7, 1942), the Court said:
"The Commission contends that the phrase 'for quick relief from the itching of eczema, blotches, pimples, athlete's foot, scales, rashes, etc.,' is a representation that the product is a remedy for the diseases or ailments thus named. Petitioner argues this phrase can only refer to itching, and that there is no implication the product is a remedy or relief for such diseases. We think there is merit in petitioner's contention that this and similar statements, when carefully scrutinized, may be thus construed. The weakness of this position, however, lies in the fact that such representations are made to the public, who, we assume, are not, as a whole, experts in grammatical construction. Their education in parsing a sentence has either been neglected or forgotten. We agree with the Commission that this statement is deceptive and calculated to be deceiving to a substantial portion of the public."
The Court later said that there would be no objection to the company advertising its product for "relief from itching", since this would not represent that the product was a permanent cure either for the symptom or the disease. It is significant in this connection to note that the first page of the blue flyer offers "immediate relief for sprains, arthritis, neuralgia, ...."
The Court also held that to require the use of the word "temporary" in the advertising, as the Commission had sought to do, would serve no purpose in the protection of the public but might limit the company in truthfully representing its product. Judge Minton, later to be Justice Minton, dissented saying that the company should be required to use the word "temporary."
In DDD, the Court also discussed the use of the term "stop", saying that it indicated permanency. The phrase "stop that pain with Lix-Pain" occurs on another example of the one column periodical advertising used by the respondent. (Exhibit A of the complaint) In a later case the same Court of Appeals in Carter Products v. Federal Trade Commission, 186 F.2d 821 (C.A. 7, 1959), recognized an indication that the attitude of the Commission as to the connotation to be given to the word "stop" might have changed since the time of the decision in DDD because in several proceedings involving anti-histamine the Commission had agreed that a company could represent that a product "stops the symptoms or manifestations" of a disease. The Court in Carter went on to approve an order of the Commission prohibiting the Company from advertising that a deodorant "stops underarm perspiration," but that it could represent that the product would "prevent the appearance of perspiration when used as directed." I believe that the phrase "stop that pain with Lix-Pain" more closely approximates a claim that the product will stop the basic organic cause of the pain than that it will stop the symptoms or manifestations of the organic disease.
The Court has refused to read the word "prevents" as equivalent to "permanent". In International Parts Corporation v. Federal Trade Commission, 133 F.2d 883 (C.A. 7, 1943), the Court said that the word "permanently" was interpolated by the Commission and refused to enforce the order. It also refused to interpret an advertisement for pimples as offering "an effective treatment" when in fact no such representation had been made and found that the only misrepresentation was that the product would dry pimples up "over night". Folds v. Federal Trade Commission, 187 F.2d 658 (C.A. 7, 1951). In Simpson v. U.S., 241 Fed. 841 (C.A. 6, 1917), the Court found that the use of the word "remedy" implied a curative tendency although not guaranteeing a cure. However, use of the words "for drunkenness" has been held equivalent to saying that a drug is a "cure, medication, treatment or prevention of drunkenness," U.S. v. 11-1/4 Doz. Packages, 40 F. Supp. 208 (W.D.N.Y., 1941). A representation that a medicine is "for" a disorder is equivalent to labelling it as a "cure or remedy", Hall v. United States, 267 Fed. 795, 798 (C.A. 5, 1920).
The respondent here contends that there is no express use of the words "cure" or "remedy" in the advertisement. In Rhodes Pharmacal Company v. Federal Trade Commission, 208 F.2d 382 (C.A. 7, 1953), the Court found that, although the word "cure" had not been used and there had even been an effort to avoid the use of the word, the company had not confined itself to advertising its product, an internal medication, for only the relief of pains or aches from rheumatism or arthritis and that a representation that a preparation is to be used "for a disease" is equivalent to labelling it as a cure or remedy for that disease.
The only place the word "cure" is mentioned by the respondent Oglesby is in the blue flyer when he says that the product is "Not a cure-all." This could just as well imply that the product could cure the diseases mentioned but not all diseases.
This proceeding presents an interesting factual situation since there are parts of the advertising which seem completely fair and well within the scope of the permissible representations discussed above. However, there are other statements such as those which have been mentioned which go beyond permissible puffing. The important question to be resolved is the impression given by the advertisement as a whole. Advertisements which are capable of two meanings, one of which is false, are misleading. 4/
Several other examples of statements in the advertisement are the following misleading items. (emphasis supplied)
1. Appendix A.
a. Below the frowning man - "this chap does not use Lix-Pain for his arthritis, neuritis, backache and all muscular aches and pains."
b. Below the smiling man - "this happy fellow uses Lix-Pain and gets relief from all those annoying aches and pains..."
2. Appendix B.
a. "fast, long lasting relief - just try Lix-Pain"
b. "gets to the root of your aches"
c. "enjoy life again"
d. Stanley affidavit - "for swollen glands, etc."
e. Petrowski affidavit - "does all you claim and much more." It brings wonderful relief from sinsus, bronchial asthma and arthritis; it is excellent for rheumatism and sore throat."
The testimonial letters used by the respondent in his advertising are very generous in their praise for the product. Scatterings of these testimonials are quoted in the complaint. Examples of others are:
1. "The Lix-Pain I purchased from you has relieved the pain of my arthritis more than anything I have ever used. My family and I would not want to be without it. Last winter I could not sleep for terrible pain in my hip and leg. After useing (sic) Lix-Pain I can now sleep soundly all night. I want to thank you Mr. Christmas for telling me about such a wonderful medecine (sic) and to the Oglesby Chemical Company for making a product that will bring lasting relief to so many people." (Govt. Exhibit 1-B-4)
2. "I received the case of Lix-Pain. I have been a diabetic for 32 years and for the past seven years have had severe neuritis. I have had to use a cane to walk for the past seven years. Since useing (sic) your Lix-Pain I am walking without a cane. I can hardly believe it. I would like to work with you selling Lix-Pain. I know you are doing your Christian duty in manufacturing this good item for suffering people." (Govt. Exhibit 1-B-4)
3. "I have had arthritis for about 18 years ---two kinds, one that affected my spine which grew together ---and for the past four years rheumatic arthritis of the joints, arms, hand and knees. In my work I drive 45 thousand miles a year with great difficulty due to extreme pain. I was in misery all the time. Since I started using Lix-Pain I now drive in comfort without pain. I shall never be without Lix-Pain again." (Govt. Exhibit 2-B-2)
The respondent adopted these testimonial letters as his own when he incorporated them into his advertising. One cannot escape liability either by saying that "the doctors say" 5/ or by the use of testimonial letters which greatly exaggerate even the claims that the respondent himself makes. 6/ The line between a representation that a product gives relief for symptoms of a disease and a representation that the product is a remedy for the disease is indeed a fine one; however, I find that the respondent represented the latter in his advertising. The first exception is disallowed.
Falsity of Representations
The complainant produced three doctors of medicine who testified concerning the various diseases mentioned in the advertising material of the respondent and the effect of the use of a counter-irritant on them. Dr. Hugh A. Thompson, an orthopedic surgeon, testified that a counter-irritant increased the flow of blood to the skin by irritating the skin causing the blood vessels to become dilated so that more blood can flow through the skin and care for the irritant. (Tr. 37) He testified that a counter-irritant would be of value in the acute stages of arthritis or neuritis only in the sense that it might give the patient a feeling of comfort. (Tr. 42) One of the testimonial letters of the respondent (supra p. 10) is from a person who supposedly had a spine which grew together. The doctor testified that pain often disappeared in such a person since the joints do not have any movement. (Tr. 44) This is referred to as a "burned-out" condition and once the spine had grown together the pain would disappear. (Tr. 44) This explanation possibly accounts for the statement of the testimonial writer that his pain had disappeared. The doctor stated that heat is a form of counter-irritant which sometimes relieved pain, (Tr. 33) and that other counter-irritants would probably relieve pain but to a lesser degree. (Tr. 64) He stated that the effect of a counter-irritant such as Lix-Pain would be very prompt after application. (Tr. 71 and 72) He testified that he agreed with the statement in the textbook by Grollman entitled Pharmacology and Therapeutics to the effect that physical measures are giving way to internal medications and thus there has been a decline in the use of counter-irritants.
Dr. A. E. Harer, another orthopedic surgeon, stated that turpentine preparations are used as a treatment for rheumatic aches of joints and muscles and he agreed with the statement from a medical treatise by Cushny which stated that:
"the practice of relieving internal organs by external irritation or counter-irritation processes still merits and perhaps merits more attention than it receives at the hands of many physicians." (Tr. 128)
Dr. William L. Long, an internist, testified that a counter-irritant might reduce the pain from sinusitis but would not accomplish a cure, (Tr. 137) and that it would be helpful to relieve a mild sore throat but not a severe sore throat. He testified that a counter-irritant might indirectly diminish the swelling of a swollen gland by bringing an increase flow of blood. (Tr. 146)
The respondent offered the testimony of three doctors of medicine, all of whom were general practitioners from North Carolina. Dr. L. Hyatt testified that a counter-irritant relieves pain and absorbs swelling by relieving pressure through drawing blood away from the deep tissues. (Tr. 174) Dr. John J. Hannibal testified that Lix-Pain was both a counter-irritant and a rubifacient which causes more blood to be brought to the ailing part of the body and that in some cases, based on his general medical knowledge and experience with Lix-Pain, benefits would be obtained in rheumatism, backache, sprains, swollen glands, bruises, sinusitis, bronchial asthma, sore throat, neuritis and swelling. (Tr. 219) He testified that he would recommend the product for some kinds of arthritis but not others. (Tr. 224) Dr. Rufus Temple, a member of the American College of Physicians, testified that he was familiar with Lix-Pain and had prescribed its use in his practice for sprains, backaches, neuralgia, arthritis and muscular pains. (Tr. 266 and 267) He testified that he would recommend the use of a counter-irritant even in an acute rheumatoid arthritic condition (Tr. 270).
As mentioned previously the respondent has never contended that his product cured the diseases mentioned on the first page of the blue pamphlet. (Appendix B) He did not attempt to prove this but he did show through the testimony of medical witnesses that the product afforded varying degrees of relief from pain caused by the various diseases and ailments. In no instance does the evidence tend to support the claims that the product offers an effective remedy or cure for the diseases.
I find, in view of the construction placed upon similar language by the courts and the medical testimony, that the representations are false. The second exception of the respondent is disallowed.
Procedural Questions
The respondent specifically excepts to twelve alleged procedural errors. Only two of these merit discussion. The rest fall within the discretion of the presiding officer or agency. Examples of these are the preclusion of testimony from lay-users as to the interpretation they place on the advertisements, the refusal to make certain rulings at the time the respondent requested them, and the refusal of the agency to entertain an interlocutory appeal on a procedural question. These exceptions are disallowed.
The respondent excepts to the ruling of the Hearing Examiner precluding the cross-examination of the complainant's expert witness, Dr. Thompson, through the use of medical treatises and articles. Cross-examination was limited to those texts which the counsel for the complainant conceded were reputable. The witness stated that he was not familiar with pharmacology but would concede that all of the texts were reputable. (Tr. 60) Respondent also sought to cross-examine the doctor based on an excerpted article from the Connecticut State Journal of Medicine. (Respondent's Exhibit 1). The Doctor testified that he had never seen the Journal before but assumed that it was reputable since it was published by one of the state medical associations. (Tr. 73) The article was based on a study of the effect of a counter-irritant containing most of the same properties as
Lix-Pain on many of the same diseases for which Lix-Pain is advertised. The study was made at the Arthritis Clinic of the Boston Dispensary, an institution about which the doctor was familiar. After objection by the complainant, the Hearing Examiner precluded cross-examination based on this article.
In Reilly v. Pinkus, 338 U.S. 269, 275 (1949), the Supreme Court said:
"It certainly is illogical, if not actually unfair, to permit witnesses to give expert opinions based on book knowledge, and then deprive the party challenging such evidence of all opportunity to interrogate them about divergent opinions expressed in other reputable books."
In Dolcin v. Federal Trade Commission, 219 F.2d 742, 746 (C.A.D.C., 1954), the Court said:
"Reilly v. Pinkus, we think, stands for the general proposition that an expert witness who bases an opinion to a significant degree upon his reading may be cross-examined as to that opinion by reference to other reputable works in his field. It is not necessary for the witness to have relied in his testimony upon the particular authority the cross-examiner seeks to use."
The Court went on to say that the trial examiner had discretion to determine to what extent cross-examination should be permitted and that, since the failure to permit cross-examination did not deny substantial justice, reversal was not warranted. The Court in Dolcin discussed the problem of proof of the reputability of treatises raised by Pinkus saying:
"The Court does not say how the authority of those works is to be determined. It seems clear from the facts given in the opinion that it is unnecessary for the witness himself to recognize the authority of the work (but see Lawrence v. Nutter, 4 Cir., 1953, 203 F.2d 540) or even to have read it (but see Shaw v. Duncan, 10 Cir., 1952, 194 F.2d 779). We think the authority of the work is for the presiding officer to decide. And we think he should have a broad discretion in determining what -- and how much -- evidence may be presented on that question." (Footnote 4, Page 746)
In Lawrence v. Nutter, supra, the Court of Appeals of the Fourth Circuit implicitly imposed a requirement that the witness himself must recognize the authoritativeness of the work if he is to be cross-examined on that work. This proceeding has already been in litigation in the United States Court in North Carolina, a part of the appellate jurisdiction of the Fourth Circuit. It would thus seem that a decision of that circuit would be controlling in this proceeding. As to all of the treatises and the article in question, Dr. Thompson conceded reputability. Therefore, I think
it was error for the examiner to preclude the respondent from cross-examination on that material.
A review of the article indicates that the findings of that study tend to corroborate the theory that the counter-irritant is of some value in reducing pain caused by arthritis, rheumatism, bursitis and miscellaneous other diseases. Because of the interpretation placed on the advertising this issue is not relevant to the proceeding. Therefore, as to this matter I do not believe that the examiner's ruling warrants a reversal. As to the medical treatises upon which cross-examination was refused there is no evidence of content; however, since the respondent at no time attempted to prove that the product was an effective remedy or cure for the various diseases and in view of the ultimate disposition made of this proceeding, the exception is disallowed.
The next pertinent exception of the respondent is also based on the excerpt from the Connecticut Journal. The respondent offered this four-page document into evidence. It was received by the examiner only on the question of intent to deceive and not on the merits of the question of the efficacy of the product. The Rules of Practice provide:
"medical or other scientific books or essays will not be admitted into evidence in lieu of oral expert testimony." 7/ Dolcin, supra at 748, also dealt with this problem. The Court there was faced with articles and treatises offered through experts described as "eminently qualified to be fully cross-examined now in the science of the field..." The Court said:
"When used to prove the truth of their contents scientific writings are clearly hearsay and are rejected as judicial evidence in all but a few jurisdictions. See United States v. One Device, 10 Cir., 1947, 160 F.2d 194, 198-199; 6 Wigmore, Evidence § 1690 (3d ed. 1940). Nevertheless, cogent arguments can be made in favor of their use. Such material, as Wigmore has pointed out, is at least as reliable as the ordinary expert's testimony from the stand. It usually is characterized by precise formulation and documentation. Moreover, the ordinary expert when testifying most often relies in whole or in part upon the written works of other experts. The chief objection to the use of scientific articles -- and the standard reason for the hearsay rule in general -- is that the utterer of the statement (the author) is not subject to cross-examination. Yet that objection may be largely obviated by requiring the introduction of the articles through experts in the field who will themselves, be subject to cross-examination."
"We think authoritative scientific writings can--and should--be freely used by administrative agencies. Congress has said that 'Any oral or documentary evidence may be received ***,' Administrative Procedure Act, § 7(c), 5 U.S.C.A. § 1006(c); see also Interstate Commerce Commission v. Baird, 1904, 194 U.S. 25, 44, 24 S. Ct. 563, 48 L.Ed 860; Bene & Son v. Federal Trade Commission, 2 Cir. 1924, 299 F. 468, 471. Furthermore, the rationale of Reilly v. Pinkus points toward use of scientific texts in adversary proceedings. But, in line with our interpretation of that case on the issue of cross-examination, we think that an agency's decision should not be reversed by reason of the exclusion of scientific writings unless substantial justice so requires. We would hesitate in most cases to say that a rule almost universal in the courts would, in an administrative proceeding, deny the parties substantial justice. And here the writings in question were not vital to petitioners' case. Lengthy articles were offered on subjects of marginal significance, which had been covered (or could have been covered) by the testimony of witnesses. The record, already of great length, would have been encumbered with a vast amount of miscellaneous learning--some dating back to 1878. We do not think the trial examiner's rulings denied petitioners substantial justice."
Dr. Hyatt testified that he had read the article from the Journal during the evening prior to his testimony and he vouched for its reputability and accuracy stating that the report represented sound medical thinking corroborating the results which he himself had experienced with the use of counter-irritants. (Tr. 181) In view of the testimony of the doctor and the opinion of the Court in Dolcin, I do not believe that the receipt into evidence of this document would have been "in lieu of oral expert testimony," in violation of the above-cited rule. No rule can be considered in a vacuum without resort to consideration of judicial interpretation and modification. I believe that the intent of this rule is to prohibit the introduction of medical treatises which are naked of any accompanying substantiating expert testimony. Such was not the case here since in effect the doctor adopted the medical report from the Connecticut Journal as his own and vouched for its reputability and accuracy. Nor was there here the problem of volume or age mentioned in Dolcin since the article was current, not lengthy, and, since the record was not of great length, it would not have been encumbered by its admission.
However, considering the lack of any evidence on the efficacy of the product as an effective remedy or cure, I do not believe that the exclusion of this document was sufficiently prejudicial to the respondent's case to warrant a reversal based on this ruling. The exception is disallowed.
Intent to Deceive
The complainant excepts to the finding of the Hearing Examiner that the respondent did not intend to deceive when he made the representations about his product to the public. Intent is a necessary element of proof. The complainant relies upon Reilly v. Pinkus, supra, and United States v. Littlejohn, 96 F.2d 368 (C.A. 7, 1938). In Pinkus the Court held that intent was a requisite element of proof but,
"an intent to deceive might be inferred from the universality of scientific belief that advertising representations are wholly unsupportable...," Littlejohn was a criminal proceeding where the Court upheld the validity of an instruction to the jury that,
"it is the law that a person intends the usual and probable consequences of his acts."
As to Pinkus it is pertinent to point out that the Court uses the word "inferred" indicating that it is only an inference which is drawn from testimony as to scientific belief and not a presumption. It is hornbook law that an inference may be rebutted. In Littlejohn the defendant had contended that the charge shifted the burden of proof from the Government to the defendant. After the Court stated that fraudulent intent was a question of fact the Court instructed that:
"the conclusion that such fraudulent intent existed would be an inference of fact and not a presumption of law." The Court then cited Agnew v. United States, 165 U.S. 36 (1897), which reversed because of an instruction to the jury that "an intent that may be presumed from the doing from an unlawful, fraudulent or illegal act" and that such an inference or presumption places the burden of proof upon the defendant. The Court pointed out that this charge was considerably different from that which it was then considering. The complainant contends that the standard of intent required in criminal matters is not the same as that required in administrative proceedings yet he seeks to rely on this criminal case as being dispositive of the issue of intent.
Oglesby Chemical Company is owned by Mr. David E. Oglesby of Kinston, North Carolina. Mr. Oglesby had been a banker in several Carolina towns until several years ago when he retired. As a banker he had been district chairman of the North Carolina Bankers Association. In the 1920s he began using Lix-Pain for himself and his family. He purchased it from a pharmacist named McKell, who called the product by a different name. Mr. Oglesby had good results with his personal use of the liniment and asked McKell to put the product on the market. At first he refused to do this but later the formula was sold to Mr. Oglesby. The transcript is rather vague as to the date but it appears to have been in the late 1920s. He applied for a copyright on the product and prepared a label with the help of a Dr. Floyd Wooten, now deceased, a medical practitioner from North Carolina. He did not offer it to the public immediately but sold it to a few friends and gave it away to business acquaintances. He began to sell to the public in 1949 and through the mails in 1951. (Tr. 333) Several wholesale drug companies in North Carolina carry the product and he has had inquiries from the national firm of McKesson and Robbins. At the time of the hearing he claimed to have sold 155,000 bottles of the preparation in the mail, none of which had been returned under the money-back guarantee.
The advertising material which he uses most frequently, the blue pamphlet, was drafted by one Mrs. Norma D. Playdon, an officer in the Mail Order Business Board, a mutual association of mail order businesses to which Mr. Oglesby belonged and in which he had confidence. Mr. Oglesby testified that he advised Mrs. Playdon in drafting the advertisement not to "imply that it would cure anything." Mrs. Playdon visited Mr. Oglesby in 1954 in her capacity as an officer of the organization. The organization issues a mail order publication from New Bedford, Massachusetts. He testified that he drafted the mimeographed sheets and other literature himself and that he believed that all the representations that he made about the product in his advertising were vouched for by testimonial letters and by Dr. Wooten. He asserted that he obtained the best medical advice that he could afford every time he "made any move about Lix-Pain." (Tr. 324-332 and 393-399)
His blue pamphlet quotes from a newspaper article date-lined New York which reported the findings of the doctors who wrote the article for the Connecticut State Journal of Medicine. The article was brought to his attention, strangely enough, by a Negro medicine man who sells the product and testified at the hearing. He then checked the original report in the Journal. Several witnesses who had known Mr. Oglesby for varying lengthy periods of time testified as to his excellent character and reputation in the community.
Finding
The Hearing Examiner found that the representations were made largely on the basis of what lay users had told him as to their opinions of the product and, for this reason and because of the demeanor and character reputation of the respondent, held that the complainant failed to prove the requisite element of intent to deceive. I believe that the Hearing Examiner was correct although the other facts recited above affect my thinking to an even greater degree in affirming the decision of the Hearing Examiner and disallowing the exception of the complainant. The inference of intent to deceive raised by the other evidence was rebutted by the facts surrounding this business and the testimony of Mr. Oglesby.
The exception is disallowed and the initial decision of the Hearing Examiner is affirmed.
1/ The designation of Solicitor was changed to General Counsel by P.L. 854, 84th Congress, 2nd Session.
2/ Florence Manufacturing Company v. Dowd, 178 Fed. 73 (C.A. 2, 1910)
3/ Ford Motor Company v. Federal Trade Commission, 120 F.2d 175 (C.A. 6, 1941).
4/ United States v. 95 Barrels of Vinegar, 265 U.S. 438 (1924).
5/ John J. Fulton v. Federal Trade Commission, 33 F.2d 506 (C.A. 9, 1929).