P.O.D. Docket No. 1/54
April 10, 1962
In the Matter of the Complaint Against
JENASOL CO.,
JENASOL COMPANY and
CHARLES ETTINGER
at
New York, New York
(respondent)
P.O.D. Docket No. 1/54 1
APPEARANCES:
Julian T. Cromelin, Esq.
Ralph B. Manherz, Esq.
Office of the General Counsel
Post Office Department
for the Complainant
Milton A. Bass, Esq. of
Bass & Friend
New York, New York
for the respondent
INITIAL DECISION OF THE HEARING EXAMINER
This proceeding was initiated by a complaint filed August 28, 1958 by the General Counsel of the Post Office Department (the complainant). The complaint alleged that respondent (above-named) in violation of 39 U. S. Code 259 and 732 was conducting a fraudulent scheme for obtaining money through the mails by making certain false representations concerning the therapeutic efficacy of the "royal jelly"*[1] contained in its product "Jenasol RJ Formula 60."
A hearing was held on issues raised by the pleadings and Hearing Examiner Edward Carlick on December 24, 1958 filed his Initial Decision. He concluded the respondent was conducting a fraudulent scheme as charged in the complaint and he recommended that the Judicial Officer of the Post Office Department issue an appropriate fraud order. Such order would have directed the appropriate postmaster to return incoming mail addressed to the respondent with the stamp "Fraudulent" unless such mail appeared to be unrelated to the enterprise found to be fraudulent.
Respondent appealed to the Judicial Officer from the Initial Decision of Hearing Examiner Carlick and filed exceptions on January 14, 1959. The then Judicial Officer (Charles D. Ablard) on April 10, 1959 issued the Departmental Decision of Hearing Examiner Carlick and accordingly signed the fraud order.
The Findings and Conclusions of the Judicial Officer
Thus, the then Judicial Officer (Ablard), in effect, found and concluded on April 10, 1959:**[2]
1. The respondent makes the following representations:
a. That the use of the respondent's product Jenasol RJ Formula 60 as directed will cure the causes of such symptoms as tiredness, irritability, headaches, insomnia and physical convulsions, due to its royal jelly content;
b. That the royal jelly content of respondent's product Jenasol RJ Formula 60 is an excellent tonic for the nerves and insures that users will thereby obtain an almost immediate feeling of well-being;
c. That the royal jelly content of respondent's product Jenasol RJ Formula 60 will improve the memory, normalize sexual capacities and help alleviate some of the ills of age;
d. That the royal jelly content of respondent's product Jenasol RJ Formula 60 restores failing or worn-out glandular activities in human beings;
e. That the royal jelly content of respondent's product Jenasol RJ Formula 60 restores lost or waning physical vigor to human beings;
f. That the royal jelly content of respondent's product Jenasol RJ Formula 60 normalizes all under-developed children;
g. That the royal jelly content of respondent's product Jenasol RJ Formula 60 normalizes all under-developed children;
h. That the royal jelly content of respondent's product Jenasol RJ Formula 60 is extremely beneficial for human beings in the improvement or correction of poor physical conditions;
i. That the royal jelly content of respondent's product Jenasol RJ Formula 60 adds a substantial and materially valuable therapeutic effect to the other ingredients in said product.
2. Respondent uses the mail as alleged in the complaint.
3. The foregoing representations concerning royal jelly are, by respondent's own pleading, admittedly false.
4. The false representations are made by respondent with intent to deceive as shown by sufficient evidence that there is a universality of scientific opinion that the product (royal jelly) is worthless for the claimed purposes for which it is sole.
5. Respondent does not have a valid defense on any ground like that of "res judicata." (There was an early proceeding against this same respondent -- H.E. Docket No. 5/29. It was first disposed of by an 'affidavit of agreement' signed by respondent. The Judicial Officer found no breach of that "affidavit of agreement" by the respondent in the earlier proceeding brought by the complainant charging such breach. Although the advertising of respondent is the same as the advertising in the first proceeding, the present complaint alleges representations, listed above, all of which are substantially different from those in the first complaint. Moreover, said Judicial Officer Ablard on April 10, 1959: the enterprise is of a continuing nature and the complainant may properly make new charges on the basis of the same advertisement; and the current charges of misrepresentation and fraud have not heretofore been adjudicated.)
6. The exceptions disclose no material errors by Hearing Examiner Carlick in limiting cross-examination by respondent or excluding certain offered evidence.
7. The ruling of Hearing Examiner Carlick in refusing to direct the expert medical witness, Dr. Kenneth Campbell, to produce his prior reports in respect to the product, which was the subject matter of the fraud proceeding, was not material error in the absence of some indication of the witness'
8. The Judicial Officer is authorized to render Post Office Department decisions, and the Rules of Practice, in all the respects challenged by respondent, are valid.
THE COURT PROCEEDING IN JENASOL
The respondent sought relief from the Judicial Officer's fraud order of April 10, 1959 by a suit for injunction filed in the United States District Court for the Southern District of New York. The Court (per Judge Levet, granted an injunction on the sole ground that the Hearing Examiner (Carlick) and Judicial Officer (Ablard) erred in respect to the denial of respondent's request for production of the prior reports of the complainant's expert witness, Dr. Campbell, and thereby materially and adversely affected respondent's right of cross-examination. (Schere v. Christenberry, 179 F Supp. 900, D.C.S.D.N.Y. 1959).
Judge Levet did not rule upon the merits of whether the evidence was sufficient to support the issuance of a fraud order. If he had deemed it appropriate to do so, the only question on the merits would have been whether sufficient evidence supported the finding of Hearing Examiner Carlick and Judicial Officer Ablard to the effect that there is a universality of scientific belief that respondent's representations as to the efficacy of royal jelly are wholly unsupportable. Such a finding, based on sufficient evidence, permits the inference to be drawn that respondent makes its advertising representations with intent to deceive. But, as stated, Judge Levet did not rule upon the merits.
Judge Levet did, however, rule that (a) the present administrative proceedings are not barred by the earlier proceedings and respondent's "affidavit of agreement" therein and (b) certain limitations placed by Hearing Examiner Carlick on the scope of cross-examination were well within his discretion as the presiding official at the hearing. Judge Levet refrained from specifically ruling on the contention of the respondent that the Judicial Officer did not have the power to issue a decision on behalf of the Postmaster General, although in a footnote Judge Levet referred to a case holding that the Judicial Officer did have such power -- United States Bio-Genics Corp. v. Christenberry, 173 F. Supp. 645 (D.C.S.D.N.Y.).*[3]
Having found one material procedural error Judge Levet enjoined the enforcement of the fraud order issued April 10, 1959 by Judicial Officer Ablard but did so "without prejudice *** to a reopening of the proceedings against the plaintiff on the complaint of August 28, 1958, to permit additional hearings, should the complainant choose to do so." (Schere v. Christenberry, supra, at page 906 of 179 F. Supp.).
THE RE-OPENED JENASOL HEARING
On December 22, 1959 the complainant moved to re-open the hearing for the purpose of correcting the procedural error which Judge Levet had found. Further hearings were therefore held on March 9, April 15, April 25 and June 28, 1960. During part of the first day of the re-opened hearing (March 9, 1960) both Hearing Examiner Carlick and this Hearing Examiner (Messitte) presided. Health reasons required Hearing Examiner Carlick thereafter to withdraw from the proceeding. The parties specifically stipulated that the withdrawal of Hearing Examiner Carlick would not be raised as a question in this proceeding and that the entire matter could be heard and decided by this Hearing Examiner (Messitte).
At the re-opened hearing the respondent engaged in an elaborate further cross-examination of Dr. Kenneth Campbell. The complainant at first was reluctant to supply the respondent with prior written reports of Dr. Campbell concerning the efficacy of royal jelly (on the ground, never presented to Judge Levet, that Dr. Campbell's prior reports related to products and claims of persons other than the respondent in this proceeding). But this Hearing Examiner considered it appropriate at the re-opened hearing to give the fullest possible scope to Judge Levet's ruling and called for the production of all of Dr. Campbell's previous reports within a period of several years (as agreed by the parties) concerning the therapeutic efficacy of royal jelly, irrespective of who the seller of the product containing royal jelly was. Thereafter, the witness Dr. Campbell and the complainant in cooperation produced eleven (11) reports signed by Dr. Campbell dealing with royal jelly. Copies of these reports were offered in evidence by the respondent and were received (Exhibits C, D, E, F, G, H, I, J, K, L and M). It is of interest that none of these reports by Dr. Campbell, in fact, dealt with the respondent (Jenasol Co., et al.) or the product Jenasol FJ Formula 60. Therefore, it appears that when he was asked by respondent's counsel in the 1958 hearing before Examiner Carlick the question, "Did you at any time prior to this case, issue an opinion to this Department with respect to the product in the case which we are now conducting," Dr. Campbell should have answered "No, sir". Instead Dr. Campbell seems to have answered erroneously, "Yes, sir". If this mistake had not occurred or if it had been duly corrected, Judge Levet probably would not have enjoined the execution of the postal fraud order on the procedural ground which he used as the basis for the injunction.
In any event it is plain that there was made available to the respondent at the re-opened hearing everything that Judge Levet indicated that respondent was entitled to have and probably a great deal more. Further reference will be made, to these reports of Dr. Campbell (Exhibits C thru M, inclusive), in this Initial Decision.
Not only did respondent's counsel cross-examine Dr. Campbell further and at great length in respect to his prior reports (Exhibits C thru M, inclusive), but in addition he cross-examined concerning other matters and finally respondent presented the testimony of Dr. Angel Lozano from Mexico. The testimony of the Mexican doctor was heard on June 28, 1960 and is more fully referred to below in the dispositive findings of this Hearing Examiner.
One of the reasons that this Hearing Examiner was of the opinion that a very broad interpretation of Judge Levet's ruling might require the production of Dr. Campbell's reports in respect to royal jelly, when contained in products sold by persons other than respondent, was the fact that the significant aspect of respondent's representations (advertising) and complainant's claim of fraud had to do primarily and essentially with the royal jelly component. So much was this so that several cases involving respondents, other than Jenasol, were originally consolidated for hearing purposes with the Jenasol case. One such case was the Bio-Genics case which was later withdrawn from the consolidated hearing by consent of all parties.*[4] Another proceeding consolidated for hearing purposes before Hearing Examiner Carlick in 1958 was the Owen case, P.O.D. Docket No. 1/49. The history of the Owen case administratively and in the courts is highly significant in connection with the disposition of the present proceeding involving Jenasol.
THE OWEN PROCEEDING
P.O.D. DOCKET NO. 1/49
In Owen (Owen Laboratories and H. L. Owen at Chicago, Illinois, P.O.D. Docket No. 1/49), a hearing on the fraud complaint was held before Examiner Carlick, as indicated above, as part of a single consolidated hearing with the Jenasol proceeding. On the basis of much the same pleadings and evidence, as Jenasol, a fraud order was issued by Judicial Officer Ablard in Owen. Because the Owen operation was at Chicago, Illinois (whereas Jenasol was at New York City) the respondent Owen sought to enjoin the Post Office Department fraud order by a petition filed in the U. S. District Court for the Northern District of Illinois. The questions raised there by respondent Owen were not substantially different from the questions which were raised by respondent Jenasol n the injunction proceeding before Judge Levet in the Southern District of New York. However, when the Owen injunction matter came before District Court Judge Hoffman in Chicago he proceeded quite differently from the way Judge Levet had in the Jenasol matter. Judge Hoffman held that Dr. Campbell's testimony did not provide a sufficient evidential basis for establishing a universality of scientific opinion with reference to the efficacy of royal jelly in the Owen product ("Enerjol Wonder Capsules") and therefore, on the basis of the whole record, intent to deceive was not proven. Consequently, Judge Hoffman issued the injunction and declared the postal fraud order on Owen null and void. However, the order issued by Judge Hoffman was appealed to the U.S. Court of Appeals for the Seventh Circuit. On November 28, 1960 the Court of Appeals (per Hastings, C. J.) reversed Judge Hoffman's order. The Court of Appeals found that what the Supreme Court had stated, concerning medical mail fraud, in Reilly v. Pinkus, 338 U.S. 269 (1949), did not raise a standard in the Owen case "by which the uncontradicted testimony of Dr. Campbell can be measured and found short, aside from any question relating to limitation of cross-examination."*[5] Therefore, the Court of Appeals for the Seventh Circuit reversed the judgment of the District Court (Judge Hoffman) and remanded the matter for consideration of certain other issues. (Owen Laboratories, Inc. v. Schroeder, 284 F.2d 445, CA7, 1960). However, the parties agreed that the Owen matter should be remanded to the Post Office Department for consolidation with the hearing and proceeding in the Jenasol matter. Thereafter, on March 1, 1962, the parties formally agreed, in a written stipulation filed with the Docket Clerk of the Post Office Department, that the result on Owen should abide the event of administrative and court decisions in Jenasol and that there would be no further court proceedings in the Owen matter.*[6]
Nevertheless, the opinion of the Court of Appeals of the Seventh Circuit Court in Owen has, for this Hearing Examiner, established something akin to binding law of the case for purposes of Jenasol. This Hearing Examiner accepts as binding upon him the determination that the evidence which was before Hearing Examiner Carlick and Judicial Officer Ablard in both Owen and Jenasol was sufficient to establish intent to deceive, within the meaning of Reilly v. Pinkus, supra, presumably on the basis of universality of scientific belief that the claims made for the product are wholly unsupportable. Of course, it is the duty of this Hearing Examiner to consider the evidence of record which was before the Court of Appeals in Owen in the light of the additional evidence presented at the re-opened Jenasol hearings. The result of the performance of that duty, by this Hearing Examiner, is more fully described below.
RELATED FOOD, DRUG AND COSMETIC
ACT COURT PROCEEDING
The claims of therapeutic value for royal jelly, in Jenasol RJ Formula 60, have been the subject matter of attack by another federal agency*[7] as disclosed by several recent court opinions from the U. S. District Court for New Jersey (Wortendyke, J.). A brief reference here to those opinions may be appropriate. (***Jenasol RJ Formula 60 *** Civil Action No. 1042-58, U.S.D.C.N.J.). In the opinions of Judge Wortendyke filed December 14, 1961 and February 6, 1962 there are findings that representations being made concerning Jenasol RJ Formula 60 and particularly its royal jelly content are false in respect to claimed efficacy in treatment for: increasing sexual vitality, alleviating ills of old age, improving memory, stimulating the appetite, normalizing growth of underdeveloped children, extending the span of human life, digestive disturbances, activating glands of the body, physical and mental symptoms of approaching old age, and achieving a pleasing state of well being.
Judge Wortendyke issued an injunction against further sale of the product with any of the labeling (representations) he found to be false. This matter is now pending for review in the Court of Appeals in the Third Circuit.*[8] Although I have taken general notice of the official actions of Judge Wortendyke which are a matter of public record, my findings and conclusions here are not predicated in any manner on the facts or legal conclusions set forth by Judge Wortendyke.
Judge Wortendyke's opinions are, however, quite interesting because of their reference to various scientists, doctors and others, who testified concerning experiments and scientific knowledge pertaining to royal jelly. More is said about this hereafter in this Initial Decision.
THE SCOPE OF THIS INITIAL DECISION
In view of the foregoing, the scope of decision for this Hearing Examiner in the instant proceeding is extremely limited. Almost everything necessary for a determination by this Hearing Examiner as to whether a postal fraud order should issue has already been authoritatively decided either by a Judicial Officer of the Post Office Department (Ablard) or a U. S. District Court (Judge Levet -- Southern District of N.Y.) or the U. S. Court of Appeals for the Seventh Circuit. Consequently, the narrow and only question which remains for this Hearing Examner to decide is whether or not a preponderance of the evidence, in the record as a whole, shows that the respondent in making the representations, admittedly false, makes them with intent to deceive.
However, for the purpose of greater clarity of presentation this Hearing Examiner is making below a somewhat broader statement of ultimate facts in support of the conclusions reached. A postal fraud order issues, under 39 U. S. Code 259 and 732, if the record satisfactorily shows that a respondent makes materially false representations with intent to deceive and obtains or attempts to obtain money by mail on the basis thereof.*[9] The necessary requirements have been met in this case and a postal fraud order should issue.
I
The Respondent Makes Representations Alleged
In the Complaint
The representations are already listed above as part of the description of the April 10, 1959 findings of the Judicial Officer. They need not be repeated here. The making of the representations, listed above, was apparently not disputed by the respondent before Judge Levet in the court proceeding in the Southern District of New York. Nor was it suggested by respondent as an issue in the course of the re-opened hearing before this Hearing Examiner. There appears to be no dispute about this aspect of the proceeding.
II
The Representations Made by the Respondent Concerning Royal
Jelly in its Product are Materially False
This was admitted by respondent's pleading in view of Rule 201.89c), 23 F.R. 2794. This conclusion reached by Hearing Examiner Carlick and Judicial Officer Ablard was confirmed by Judge Levet, for the U. S. District Court, in the Jenasol case and by Judge Hastings, for the Seventh Circuit Court of Appeals in the Owen case. There is no pending dispute about this aspect of the proceeding.
III
Respondent Uses the Mail as Alleged
In the Complaint
There is no dispute about this.
IV
Respondent Makes the Representations, Admittedly
False, With Intent to Deceive
As indicated above, the uncontradicted testimony of Dr. Campbell before Hearing Examiner Carlick and Judicial Officer Ablard has been considered sufficient to establish intent to deceive. (Owen Laboratories, Inc. v. Schroeder, supra, 284 F.2d 445, CA7). A summary of relevant portions of Dr. Campbell's testimony, at the 1958 hearing, is contained in Judge Hastings' opinion for the Court of Appeals in Owen and the summary is just as applicable to the Jenasol product as to the Owen product. I adopt that summary with the same force and effect as though it were set forth here in full.*[10]
At the re-opened hearing in 1960 not only did Dr. Campbell's testimony remain virtually uncontradicted but, in the opinion of this Hearing Examiner, it was bolstered. Thus, for example, in a memorandum written on June 6, 1958 (Exhibit K) Dr. Campbell said there was no convincing scientific evidence that royal jelly would be effective to increase longevity, vitality, good health and the like. He mentioned scattered reports in the European literature reporting certain benefits from the use of royal jelly but he pointed out specifically that "such studies are abbreviated in character, are not controlled and have little value in demonstrating by scientific and objective criteria the supposed value of royal jelly ****." (See also Exhibits E, F, I and J containing similar reports of Dr. Campbell and tending to show his wide study of royal jelly marketed, under various names and with various additional substances, by many sellers making divers claims of therapeutic efficacy for royal jelly). Dr. Campbell also pointed out in some of these reports the possible confirmation of his statements, concerning the lack of scientific belief of any value therapeutically in royal jelly, by reason of certain charges brought in foreign countries against persons claiming that royal jelly had therapeutic value. (See for example Exhibits E and F). Dr. Campbell's testimony, in toto, thus was not less than adequate to meet the standards of Reilly v. Pinkus, supra, including the standard implicit in the statement that 'intent to deceive might be inferred from the universality of scientific belief that advertising representations are wholly unsupportable ***." Dr. Campbell's testimony as a qualified expert supports such an inference and there is absent from the record scientific or other reliable evidence to the contrary.
The testimony of Dr. Lozano does not adversely affect the significance of Dr. Campbell's testimony. Dr. Lozano is a Mexican physician with a background of only 5 years practice. He testified that he used royal jelly for treatment of physical impotency in man with favorable results in many cases. However, in measuring the reliability of Dr. Lozano's testimony, I noted that he also testified that royal jelly was effective to cure diabetes and that he had used it for that purpose. Dr. Campbell's medical opinion and his testimony concerning the evaluation of royal jelly by the American Diabetes Association tends to show the scientific fact to be that royal jelly does not affect the course of diabetes, let alone cure it. There is no scientific evidence whatever to support Dr. Lozano's glib opinion that royal jelly cures diabetes. Dr. Lozano also testified that he had used the royal jelly in the treatment of some of the accompaniments of old age, including arthritis, with good results. Dr. Campbell's testimony indicates that exhaustive scientific research -- by the National Institute of Health (Institute for Arthritis and Metabolic Diseases) in respect to treatment of arthritis provides not a shred of corroboration for Dr. Lozano's glib opinion on royal jelly as a therapeutic agent for arthritis. He (Dr. Lozano) at times appeared to lack knowledge concerning the known or identifiable basic composition of royal jelly. He conceded that he had no knowledge of any recommendations for the use of royal jelly for human ailments which could be found in medical text books or in medical school courses. His opinion as to its efficacy was apparently based only on his own use of the substance unsupported by any records or anything to indicate extensive study, scientific observation and evaluation. I am inclined to the view that Dr. Lozano's testimony involving the alleged effectiveness of royal jelly in curing diabetes and treating arthritis evidences a gross exaggeration or misconception contrary to all reliable medical knowledge and research. All the evidence, including particularly Dr. Campbell's medical opinions concerning these diseases (diabetes and arthritis) and his testimony in respect to the state of medical knowledge and research related thereto, tends to discredit completely Dr. Lozano as a witness qualified to supply for the record evidence of scientific belief concerning the value of royal jelly for the purposes claimed by the respondent. While one may concede that Dr. Lozano has a belief concerning the therapeutic usefulness of royal jelly, this Hearing Examiner finds his (Dr. Lozano's) belief is totally lacking in scientific basis and that it is therefore neither objective no credible as a contradiction to Dr. Campbell;s basic testimony. The complainant, in his brief, has suggested some additional reasons for discrediting Dr. Lozano's testimony but those noted by this Hearing Examiner appear to be quite enough.
There may well be in this case an independent basis for finding intent to deceive, separate and apart from the evidence of universality of scientific belief that the advertising representations are wholly unsupportable. Thus, for example, an examination of the advertising which the respondent admittedly used in this case refers to an allegedly famous Swiss surgeon, Dr. Paul Niehans, as one who "Praises Royal Jelly" (Exhibit 3-A). But respondent did not produce any Dr. Niehans as a witness or even attempt to take his deposition. Again, for example, under the caption "Miracle Bullets for the Ills of Old Age" respondent's advertising (Exhibit 3-A-1) shows headlines and titles from various magazines and newspapers implying that they all tend to support respondent's claims with respect to the therapeutic efficacy of royal jelly. But no one connected with respondent took the witness stand even to suggest that the representations made with regard to the usefulness of royal jelly were made in reliance by the respondent upon any particular magazine or newspaper article or any other specified information. This failure to testify in support of the advertised basis for the large claims made for the product may well be indicative of a lack of respondent's good faith. A more specific example is one page of respondent's advertising which in large letters lists the "Discovery of Insulin - Dr. Frederick Banting" in order to give the impression that this famous physician supports respondent's claims for royal jelly (Exhibit 3-A-1). However, a careful reading of the very small print in the item merely discloses a statement that royal jelly is rich in protein and vitamins with a high concentration of pantothenic acid, "the vitamin of the important B-Complex group, that has to do with increasing the life span in animals." (Emphasis supplied). The small print actually negates the obvious attempt of the respondent by the large print and surrounding items to convey the impression that Dr. Banting supports the large claims made by the respondent for royal jelly as therapy for human ailments. (Emphasis supplied). This type of advertising is, in my opinion, indicative of an intent to deceive the public by deliberately creating the impression that a well know and highly reputable scientist supports the advertising claims, when the truth appears to be that his scientific belief does not begin to accord with the large representations made in the advertising. This too is a hallmark of an intent to defraud.
In view of the foregoing, I find that the respondent makes the false representations described above with the intent to deceive.
In passing it may be worthy of mention that in a fraud case of this type the complainant and his aides are perhaps too easily content to rely solely on the testimony of Dr. Kenneth Campbell even when a doctor is produced who purports to testify that he has used the product in question with alleged good effect on some of his patients. It may be that such limited medical and scientific presentation by complainant tends to foster unnecessary litigation. Thus, in the Owen case Judge Hoffman in the U. S. District Court in Chicago was persuaded to throw the case out on the merits. True, he was reversed by the Court of Appeals for the Seventh Circuit which found Dr. Campbell's uncontradicted evidence sufficient to meet the applicable standard of Reilly v. Pinkus, supra. In another case, the complainant's sole reliance on Dr. Campbell's uncontradicted testimony may well have caused Judge Wortendyke in New Jersey to declare the Post Office Department fraud order null and void. This decision was reversed by the U. S. Court of Appeals for the Third Circuit (U.S. Health Club, Inc. v. Major, 292 F.2d 665, 1961) where the court stated at page 668 that Dr. Campbell's "uncontradicted testimony established a universality of medical opinion on the crucial issues."*[11]
An examination of the two opinions, heretofore mentioned, of Judge Wortendyke in the seizure and injunction proceeding under the Food, Drug and Cosmetic Act, 21 U.S. Code 301 et seq. discloses references to considerable expert testimony concerning Jenasol RJ Formula 60 and royal jelly by a number of scientists including some who had made tests of the product on animals and humans. (See, for example, references in Judge Wortendyke's opinion filed December 14, 1961 to the testimony of Drs. Paul Gyorgy, Herbert S. Kupperman, Lewis Barness, William H. Lewiss, Ernest J. Umberger and Arthur Grollman).*[12] In view of the apparent availability of this kind of testimony it is not easy to understand why the complainant continued to rely exclusively on Dr. Campbell's testimony particularly after Dr. Lozano became a witness for the respondent. It may be, of course, that complainant's aides having committed themselves to Dr. Campbell's testimony in 1958 felt some special reluctance to utilize other and more recent scientific evidence concerning royal jelly such as was presented in the Food and Drug court case. In other postal proceedings the complainant has been impressed with the importance of presenting the testimony of specialists in the field of medicine and science in order to establish the fraudulent nature of claims espoused by one or more medical doctors testifying for a respondent. See, for example, in re Cardiac Society, P.O.D. Docket No. 1/187. Although the complainant there presented Dr. Campbell's testimony he also presented the testimony of three or four other specialists, as experts, at lease one of whom had conducted tests in respect to the questioned product. When this case was reviewed by the U. S. District Court at Detroit, the Judge (Thornton) had no difficulty in finding on the merits that the complainant's charge of fraud had been adequately proved before the Hearing Examiner notwithstanding the elaborate testimony of a medical doctor on behalf of the respondent (Cardiac Society) and some of its claims. (Cardiac Society v. Baker, Civil Action No. 21074 U.S.D.C.E.d. Mich. - June 7, 1961).
Be all this at it may, I find that the record in this case adequately establishes (a) respondent made and is making the representations, set forth above, as listed in the complaint,*[13] (b) those representations are materially false, (c) those representations are made with intent to deceive and (d) the respondent obtained and attempted to obtain money through the mail by means of those representations in the sale of its product; and respondent is continuing to do so.
In viewing the foregoing, a fraud order should issue in the form submitted herewith.
All findings and conclusions proposed by the parties to the extent embodied in this initial decision are hereby adopted, all others are rejected as immaterial, irrelevant or unnecessary to the determination of the basic issues here presented.
Jesse B. Messitte
Hearing Examiner
[1] Royal jelly was shown to be a special kind of food, derived from the pharyngeal or salivary glands of bees and fed by the worker bees to the larvae of queen bees.
[2] The findings and conclusions are embodied in the Departmental Decision of April 10, 1959, when read together with Hearing Examiner Carlick's Initial Decision of December 24, 1958 and the complaint filed August 28, 1959.
[3] Affirmed 278 F.2d 561 (CA 2, 1960).
[4] On November 25, 1958 Judicial Officer Ablard issued a fraud order against United States Bio-Genics Corporation for breach of its affidavit to discontinue certain representations in the sale of its royal jelly product - Royljel Formula 101 - See United States Bio-Genics Corporation v. Christenberry, supra, 173 F. Supp. 645, 647.
[5] The Supreme Court in Reilly v. Pinkus, supra, at page 276 said "An intent to deceive might be inferred from the universality of scientific belief that advertising representations are wholly unsupportable****."
[6] By deferring this Initial Decision in Jenasol, pending the outcome of Owen in the Seventh Circuit Court of Appeals this Hearing Examiner has not only had the benefit of the teaching of the opinion of the Court of Appeals in Owen but also, with the cooperation of the parties, he has eliminated the need for a separate re-opened hearing, further full administrative proceedings and any further court action in Owen.
[7] Suit for seizure etc. under Food, Drug and Cosmetic Act, 21 U.S. Code 301 et seq.
[8] The pendency of this suit in the U.S. District Court for New Jersey (suite terminated there in February 1962) gave promise that the result would be an early effective court disposition concerning the sale of "Jenasol RJ Formula 60" as a therapeutic agent for various human ailments. And it appeared likely that such court disposition would probably render unnecessary or inappropriate further administrative action in the instant Post Office Department proceeding. Therefore, after informal consultation with representatives of the parties, this Hearing Examiner deferred issuance of his Initial Decision. Full responsibility for deferring the Initial Decision is assumed by the Hearing Examiner, although it is only fair to indicate that the parties on several occasions informally indicated they were either in agreement or not opposed. Although the decision of Judge Wortendyke in the Food and Drug matter is now on appeal to the Third Circuit Court of Appeals, this Hearing Examiner does not consider further deferral of his Initial Decision appropriate.
[9] Pertinent excerpts from provisions of 39 U. S. Code 259 and 732 are set forth in Appendix A to this Initial Decision.
[10] For convenience, excerpts from the summary, and certain related matters, are set forth in Appendix B to this Initial Decision.
[11] The Third Circuit Court of Appeals also decided, upon study of the Administrative Procedure Act, 5 U.S. Code 1006 et seq., that after a hearing was held before an APA Hearing Examiner (P.O.Dept.) who rendered an Initial Decision, the Judicial Officer (P.O.Dept) was empowered to make the final decision on behalf of the Postmaster General. This would seem to squelch the respondent's contention to the contrary in the Jenasol case particularly in view of Greene v. Kern, 178 F. Supp. 201 (D.C.N.J. 1959) and United States Bio-Genics Corp. v. Christenberry, 173 F. Supp. 645 (D.C.S.D.N.Y. 1959), affirmed 278 F.2d 561 (CA 2, 1960). See also statutory and regulatory developments in 74 Stat. 553 (P.L. 86-676) and Headquarters Circular 61-45, November 13, 1961, (26 F.R. 10813).
[12] Respondent's motion of January 23, 1962 to include in the record of this Post Office Department Jenasol proceeding certain evidence supplied by scientists who testified in the Food and Drug Administration action in court (U.S.D.C.N.J) was withdrawn February 6, 1962 after complainant filed papers in opposition to the motion. Thereafter, this Hearing Examiner nevertheless considered the possibility of re-opening the hearing, on his own motion. After informal consultation with the parties and careful study of the entire record, this Hearing Examiner concluded not to re-open the hearing. This s not to suggest that further medical and scientific evidence might not have either (a) buttressed Dr. Campbell's testimony and complainant's contentions or (b) supported to some extent some of the respondent's contentions. But in an adversary proceeding, such as this, where neither party seeks to present additional evidence, this Hearing Examiner would not, on his own motion, re-open the hearing for additional evidence, unless it were necessary to do so to avoid a substantial risk of (a) injury to the public interest or (b) miscarriage of justice.
[13] Judicial Officer Ablard dismissed one item (concerning effect of royal jelly on longevity) of the representations listed in the complaint. The ground stated for the dismissal was that this particular representation was the same as a representation that the complainant charged, in a previous proceeding, the respondent had made. While I think that the Judicial Officer Ablard's ruling dismissing this portion of the complaint is open to serious question (particularly in view of the fact that as he pointed out in his decision the enterprise was a continuing enterprise), nevertheless, I recommend to the present Judicial Officer (Judge Bosone) that Mr. Ablard's previous ruling in this regard should not be disturbed. My reason for this is that Mr. Ablard's decision has already, to a considerable extent, been reviewed by Judge Levet in the injunction proceeding in the U.S. District Court for the Southern District of New York. (Schere v. Christenberry, supra). Moreover, the complainant has never requested that the dismissed portion of the complaint be reinstated.