P.O.D. Docket No. 3/41
June 29, 1971
In the Matter of the Complaint Against
PARKER PUBLISHING CO., INC. at
West Nyack, New York 10994
P.O.D. Docket No. 3/41;
APPEARANCES:
Louis A. Arturo, Esq.
H. Richard Hefner, Esq. Law Department
United States Postal Service
Washington, D.C. 20260 for the Complainant
John R. Schoemer, Jr., Esq.
Townley, Updike, Carter & Rodgers
220 East 42nd Street
New York, New York 10017 for the Respondent
POSTAL SERVICE DECISION
By Complaint docketed May 7, 1970, the General Counsel (Complainant) charged that Parker Publishing Co. (Respondent) is engaged in activities actionable under 39 U.S.C. 4005 in seeking orders for the book "Nutrition for Health" by means of advertising that made false representations concerning the book. Respondent denied the charge and the matter went to hearing before the Department's Chief Hearing Examiner on July 1 and 2, 1970. The Chief Hearing Examiner's Initial Decision filed October 14, 1970, upheld the Complaint and recommended the issuance of a misrepresentation order. Respondent appealed on January 18, 1970 and filed a supplementary brief on January 29, 1971. Complainant filed his answering brief on February 16, 1971.
PRELIMINARY CONSIDERATIONS
Constitutionality
Respondent challenges the constitutionality of 39 U.S. Code 4005. However, the Judicial Officer is not authorized to determine the constitutionality of statutes. 39 C.F.R. 821.3(c)(ii). 1/ In any event this question is now being litigated in Vincent Lynch d/b/a Brewster Products v. Blount, Postmaster General, S.D. N.Y., 71 Civil No. 1564.
Obtaining Money or Property by the Advertising Representations Respondent asserts that Respondent's advertisements do not provide the information on which prospective purchasers decide to forward money and, therefore, it asserts Respondent is not obtaining money as a result of the representations contained in the advertisement. The factual basis for this assertion is that the advertisement proper (Exhs. A-1, D-2) solicits orders on a 10-day approval basis.
Respondent's witness, Costello, testified (Tr. p. 176, 1. 24) that 20 per cent of the persons receiving the book on the trial examination basis asked for and received refunds. This means that 80 per cent remitted money through the mails to the Respondent as payment for the book.
It follows that orders are received by the Respondent in response to the advertising representations and that up to 80 per cent of these orders result in Respondent's receiving money through the mails. The advertising representations made by the Respondent and cited in the Complaint are an integral part of Respondent's mail order business (i.e., scheme or device) relating to the sale of "Nutrition for Health." These sales would not occur in the absence of advertising representations. It is clear, therefore, that Respondent has been obtaining money through the mails by means of the representations in the advertising even from those who order the book on approval. In addition, Respondent's contention is based on an erroneous assumption that the Respondent through his advertising representations does not seek remittances with the initial orders for the book. The order card accompanying the advertisement (Exhs. A-2 and D-1) contains the following:
"SAVE MONEY: Check here if you prefer to enclose payment (plus sales tax where applicable) now, in which case we pay postage and packing charges. Same return privilege, full money-back guarantee."
Thus money is solicited from the public with the initial order; it is not true as Respondent contends that no money is exchanged until the customer has seen and examined the book.
Respondent does offer to refund payments received with the orders on demand within a 10-day period. However, it is well settled that when persons are induced to part with their money as a result of false representations, the evil is not cured by a promise to refund the purchase price if the customer finds the article unsatisfactory. Farley v. Heininger, 105 F.2d 79, D.C. Cir. 1939; Harris v. Rosenberger, 145 F.449, 8th Cir. 1906.
Issues Raised by Pleadings
An order under 39 U.S.C. 4005 is appropriate, if it is determined that the advertising representations are false on either or both of the following bases and that the Respondent had appropriate notice that it was charged on such bases:
1. Because the reader following the procedures prescribed in the book would not achieve the benefits represented in the advertising; or
2. Because the book prescribed procedures in addition to the nutritional regimen that the advertising representations state are the exclusive procedures. The issues as framed by the pleadings encompassed both bases. Paragraph 2(a) of the Complaint charges:
"(2) That by means of the advertising matter mentioned in paragraph (1), and in similar matter, the Respondent represents to the public in substance and effect:
"(a) That Respondent's publication 'Nutrition for Health' advertised in Exhibit 'A' attached hereto provides a nutritional regimen which constitutes an adequate, effective or reliable prevention, treatment and/or cure for:" a long list of diseases.
Paragraph 3(a) of the Answer states that Respondent "Denies the allegations in paragraph (2) that Respondent represents in its advertising matter that the publication 'Nutrition For Health' (hereinafter 'publication') provides a nutritional regimen which:
"(a) Constitutes an adequate, effective or reliable 'cure' for the ailments enumerated in paragraph (2);
Paragraph 5 of the Answer "SECOND DEFENSE" states "Respondent's advertisement, Exhibit 'A' to the complaint, accurately represents the contents of the publication it purports to advertise."
Paragraph 2 of the Complaint charges:
"(2) That by means of the advertising matter mentioned in paragraph(1), and in similar matter, the Respondent represents to the public in substance and effect:
"(b) That Respondent's publication 'Nutrition for Health' will endow the reader with knowledge that will enable him to" achieve stated health objectives including the objective to "eliminate aches, pain and sickness out of his life".
Paragraph 3(b) of the Answer states Respondent "Denies the allegations in paragraph (2) that Respondent represents in its advertising matter that the publication 'Nutrition For Health' (hereinafter 'publication') provides a nutritional regimen which:
"(b) Will enable a reader to 'eliminate aches, pains and sickness out of his life'."
Paragraph 3(b) of the Answer quoted above controverts subparagraph 2(b)(1) of the Complaint. The Answer, of course, denies that the representations made in the advertisement are false.
Notice to Respondent
Respondent contends the case was begun on the first basis set out on page 4 above and concluded on the second. While it is true as Respondent contends that Complainant did elicit testimony from his witnesses as to the efficacy of the treatments recommended in the book, including those outside the scope of the advertising, Respondent was not, or should not have been, misled into believing the case was proceeding only on the second basis mentioned above. As pointed out above, Respondent's answer directly controverted the claim that the advertising representations misrepresented the contents of the book. Some of the questions put to Complainant's first witness on direct examination dealt with whether the book prescribed only a nutritional regimen, 2/ and whether following the nutritional regimen would produce the benefits claimed 3/ and related matters.
Although these questions were interspersed with questions relating to the broader question, Respondent must have been alert to the significance of the former in view of the pleadings. Additionally, before the conclusion of the Complainant's case, the Chief Hearing Examiner stated the Complaint was based on the narrower theory (Tr. 165, 11. 22-25). Thereafter, at the conclusion of Complainant's case, Respondent's Counsel moved to dismiss on the grounds that "the evidence . . . indicates that the advertising circular does not overstate the claims of the book" (Tr. 168, 11. 18 et seq.).
Respondent's proposed Findings of Fact and Conclusions of Law dealt extensively with the subject. See Proposed Findings 14-39 and Proposed Conclusions of Law 4 and 5.
Thus, before hearing the initial pleadings put into issue both the question of whether the advertisement falsely represented that a person following the program set forth in the book would achieve the results represented in the advertisement and the question of whether the advertisement falsely represented the program contained in the book.
At all subsequent stages of the proceeding Respondent was on notice that the latter issue was in the case and his attorney responded to that issue both at the hearing and in his subsequent pleadings. Accordingly, the Respondent has been accorded the rights that the court found were denied the Plaintiff in Rodale Press, Inc. v. Federal Trade Commission, 407 F.2d 1252 (D.C. Cir. 1968).
THE MERITS
The Initial Decision
After a full hearing and consideration of briefs the Chief Hearing Examiner concluded an order under 39 U.S.C Code 4005 should issue after finding with respect to the advertising circular:
"5. The language of the advertising circular leads the average reader of the advertisement to believe that the book therein offered for sale will provide the reader with information in regard to dieting by means of which he, by himself without assistance or advice from physicians and without the use of medicines or durgs, may successfully treat, cure, or prevent a wide variety of diseases and debilities.
"6. The representations in Respondent's advertising material as set forth in paragraph '(2)' of the complaint are materially false:
"A. In the book itself, the need for competent advice by physicians is recognized.
"B. Four highly qualified physicians, one of whom appeared on behalf of Respondent, testified, in substance, that dieting, alone, is utterly inadequate as a modality of treating many of the various conditions described in Respondent's literature."
Review of Initial Decision
After review of the full record and consideration of the Respondent's exceptions to the Initial Decision, I find the Chief Hearing Examiner's findings of fact, including the central findings quoted above, are fully supported by the record. It is unrealistic to argue as does Respondent that the book "Nutrition for Health" merely mentions osteotherapy, enemas, and rest 4/ as subsidiary and sometimes necessary tools of treatment.
"I also include in my regimen a system of exercises which the patient does while lying in bed, regenerating the body on a fast. The patient is shown how to exercise every muscle of the body." (Exh. C-1, p. 25). "I consider the osteopathic procedures and the exercises, together with the fast, as the most potent aids in regenerating the sick body]" (Exh. C-1, p. 25).
Complainant produced three expert witnesses to testify about specific portions of the book. With respect to specific diseases each of these witnesses testified the book recommended methods of treatment or cure other than a nutritional regimen and that the nutritional regimen in the book would not be effective alone. 5/ While isolated passages of the advertisement 6/ may be cited as showing that only a nutritional regimen is prescribed in the book, more striking is the overall impression in the advertising. Taken as a whole the advertising is as the Chief Hearing Examiner has found it to be.
SPECIFIC RULINGS ON RESPONDENT'S EXCEPTIONS
Exceptions to Findings of Fact
Exceptions 1 and 2
"The essence of the Department's complaint is that Respondent falsely represented that the book sets forth principles of diet alone."
"The charges in the complaint are directed at the disparity between the statements made about the book in the advertising literature and the actual contents of the book."
Ruling
While the Chief Hearing Examiner may have done Complainant an injustice in excluding from consideration the broader claim of its double-barrel case, he was not in error in finding that the charge that "Respondent falsely represented that the book sets forth principles of diet alone" was in issue during the whole proceeding.
Exception 3
"The finding that 'The contents of Dr. Chase's book are in sharp contrast to the impression that the advertisement would create in the mind of the average reader'."
This finding is amply supported by a comparison of the advertisement and the book. In addition, the Complainant's medical witnesses testified that the content of the book is at variance with the content as represented in the advertisement.
Exception 4
"The words 'Doctor', 'Doctor bills', and 'medicines' were always used in a manner that was diaparaging (sic)or disapproving of them."
Ruling
While the finding to which exception is taken is not essential to support the ultimate conclusions in the Initial Decision, a reading of the advertisement supports the Chief Hearing Examiner's conclusion that the book disapproved of the conduct of doctors and disparaged doctor bills and medicines.
Exceptions to Conclusions of Law
Exception 1
"The conclusion that the form of the contract between Respondent and purchasers of the book is immaterial to a violation of 39 U.S. Code § 4005, in that although purchasers are not required to pay for the book until they have had it for ten days, during which they may inspect its contents, the inducement to order the book on the basis of misleading advertising statements provides sufficient basis for finding that Respondent operated a scheme or device to extract money from purchasers by false representations."
Ruling
This exception is without merit. See discussion above under the heading "Obtaining Money or Property by the Advertising Representations."
Exception 2
"The representations in Respondent's advertising material as set forth in paragraph (2) of the complaint are materially false."
Ruling
On a review of the whole record I find the Chief Hearing Examiner's determination to be correct.
Exception 3
"The ordinary reader of the advertisement would conclude that he was being offered a book setting forth dietary instructions alone which by themselves would produce the promised results."
Ruling
A perusal of the advertisement can only lead to the conclusion that the reader is being offered a book providing a dietary or nutritional regimen which alone would produce the promised results.
Exception 4
"The Respondent is engaged in a scheme or device for obtaining money or property through the mails by means of false representations within the meaning of 39 U.S.Code § 4005."
Ruling
The facts of record establish that Respondent is engaged in a scheme or device for obtaining money or property through the mails by means of false representations within the meaning of 39 U.S. Code 4005.
CONCLUSION
The Initial Decision of the Chief Hearing Examiner is affirmed.
A remedial order as provided in 39 U.S.C. 4005 will issue forthwith.
06/29/71
Wenchel, Adam G.
___________________
1/ See also Engineers Public Service Co. v. S.E.C., 138 F.2d 936 at 952, 953; cf Public Utilities Commission v. U.S., 355 U.S. 534 at 539.
2/ Tr. p. 15, 1. 3; p. 21, 1. 17; p. 26, 1. 18; p. 36, 1.8.
3/ Tr. p. 16, 1. 16; p. 17, 1. 16; p. 22, 1. 4; p. 28, 1. 22; p. 45, 1. 15; p. 50, 1. 18; p. 55, 1. 20; p. 60, 1.18.
4/ "She responded to rest in bed, two daily enemas, daily osteopathic treatments, raw fruit juices and raw vegetable juices, fed to her without forcing." (Emphasis in original) (Exh. C-1, p. 19). "Indeed, I would not let any of my patients remain on a fast without receiving daily osteopathic treatment." (Exh. C-1, p. 24). "There are no substitutes for fasting, carried on together with osteopathic treatment, in the medical field of the older schools.
5/ See e.g., Dr. Putnam: Tr. p. 15, 1. 3; p. 16, 1. 2; Dr. Handelsman: Tr. p. 89, 1. 23; p. 94, 1. 6; Dr. Shugoll: Tr. p. 151, 1. 25; p. 153, 1. 21.