P.O.D. Docket No. 3/77
May 23, 1972
In the Matter of the Complaint Against
GRAPEFRUIT DIET
7046 Hollywood Boulevard, and
Post Office Box 3689 at
Hollywood, California 90028
P.O.D. Docket No. 3/77;
APPEARANCES:
Thomas A. Ziebarth, Esq.
Law Department U. S. Postal Service
Washington, D.C. 20260 for Complainant
Stanley Fleishman, Esq. Suite 718,
6922 Hollywood Boulevard
Hollywood, California 90028 for Respondent
POSTAL SERVICE DECISION
This proceeding in which the General Counsel seeks a remedial order pursuant to 39 U.S.C 3005 against the name and address shown in the caption is before the Judicial Officer on Respondent's appeal from the Initial Decision of the Hearing Examiner.
The Initial Decision
After hearing evidence and receiving briefs, the Hearing Examiner in his Initial Decision made findings substantially as follows:
1. Respondent Hollywood House International, Inc., doing business as Grapefruit Diet, is engaged in selling a weight-reduction program to the general public which it designates as the "Grapefruit Diet".
2. The record establishes that Respondent does, in fact, obtain money through the mail from customers who complete and mail the order form, or otherwise order the booklet, by sending money through the mail in payment of Respondent's weight-reduction plan.
3. As charged in the complaint Respondent's advertising for mail orders makes the following representations which are false in all material respects:
a. That grapefruit is an integral and essential part of the diet regimen and contributes materially to a rapid and substantial weight loss on the part of the dieter by acting as a "catalyst" or "trigger" to start the "fat burning process".
b. That an obese person may, under this diet, eat as much as he wants of various fatty foods normally forbidden in a weight-loss regimen and still lose "10 pounds in 10 days" and "1 1/2 pounds every two days thereafter" until his weight is down to normal because "fat does not form fat".
c. that the diet plan is new or "revolutionary", or is different from other high-fat, high-protein, low-carbohydrate weight-loss regimens which are universally available.
d. That "when the fat and bloat are gone", the dieter's weight will remain constant.
On the basis of the foregoing findings and his further determination that the misrepresentations were material, the Hearing Examiner concluded "Respondent is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations, in violation of 39 U.S. Code 3005". On that basis he recommended issuance of a remedial order under 39 U.S.C. 3005.
Respondent's three exceptions to the Initial Decision are considered below in reverse order.
Exceptions and Rulings
EXCEPTION III - Appellee adduced no evidence to establish that Appellant made any material false representations.
Respondent does not contend that it did not make the representations the Hearing Examiner found it had made, nor does Respondent seriously contend that these representations are untrue. Rather it bases this exception on the claim that the statements are permissible puffing and should not be considered as material. However, the representations found to be false are representations of fact such as the effect produced on body functioning produced by eating grapefruit and the amount of food, including fatty foods that may be eaten under the diet plan without hindering the achievement of a weight loss stated in terms of precise pounds and days. Factual misrepresentations cannot be regarded as mere puffing and those involved here are material. See page 14 and 15 of the Initial Decision.
EXCEPTION II - 39 U.S.C. § 4005 1/ violates the First and Fifth Amendments to the United States Constitution for the same reasons the Supreme Court found in Blount v. Rizzi, 400 U.S. 410, that 39 U.S.C. §§ 4406 and 4007 2/ were unconstitutional.
Since the Supreme Court has within a matter of months affirmed a decision of a three-judge court decision upholding the constitutionality of 39 U.S.C. 3005, 3/ this exception is clearly without merit and is denied.
EXCEPTION I - The statute, on its face and as construed and applied, violates the due process and free speech provisions of the First and Fifth Amendments to the United States Constitution. The argument in support of this exception is in four parts. The first two substantially duplicate Exception II and do not require separate comment. The third argues that because in Respondent's view the false representations are legitimate puffing, issuance of an order is constitutionally prohibited. But as shown above, the false representations are material ones and cannot be considered mere puffing. The fourth argument is that Hearing Examiner's denial of Respondent's Application for Subpoena Duces Tecum directed to the Federal Trade Commission 4/ denied Respondent due process of law guaranteed by the Fifth Amendment to the Constitution.
The denial was based upon the Hearing Examiner's determination both that the Postal Service has no subpoena power and that in any event the information requested has no relevance to any issue in the pending proceeding.
Assuming arguendo the relevance of the information sought, Respondent still has not shown it has been prejudiced by its inability to obtain the requested subpoena. Nowhere in the record is there any indication that the Commission would not have supplied Respondent the information and copies of the records requested, if he had asked the Commission. The Commission is bound by the Freedom of Information Act 5/ that requires agencies to make its records, with stated exceptions, available for copying, and its regulations 6/ implementing the Act also tell how members of the public may obtain copies of records. Respondent also urges that by reasons of the Federal Trade Commission's discontinuance of an investigation after the hearing in this matter, that agency found Respondent's advertising to be acceptable. But it cannot be concluded from the Commission's letter that the Commission had determined more than that it was not justified in expending its funds on further investigation in view of the pendency of the instant proceeding. 7/ Exception I is denied.
Conclusion
The Hearing Examiner's Initial Decision holding that Respondent is engaged in a scheme or device to obtain money or property through the mails by means of false representations within the meaning of 39 U.S.C. 3005 is affirmed. A remedial order under that section in the usual form will be issued forthwith. However, in consideration of Respondent's application for a 10-day stay and Complainant's agreement thereto, the Postmaster at Hollywood will be instructed not to apply the order until the tenth day after he receives it.
05/23/72
Wenchel, Adam G.
____________________
1/ Re-enacted as 39 U.S.C. 3005 effective July 1, 1971 by P.L. 91-375.
2/ Probably should be §§ 4006 and 4007, now §§ 3006 and 3007.
3/ Lynch v. Blount, 330 F.Supp. 689, S.D.N.Y. (1972), aff'd 404 U.S. 1007 (1972)
4/ "The respondent herein applies for a subpoena duces tecum addressed to the Federal Trade Commission, Washington, D.C., for an order requiring the said Federal Trade Commission to bring to the hearing in the above entitled matter, now set for May 3, 1971, all records reflecting action taken by the said Commission concerning false claims made in connection with nutritional claims, commencing January 1, 1970, to April 10, 1971."
7/ The Commission's letter of November 19, 1971, to Respondent states in part:
"On the basis of the information developed in the investigation, it does not appear that further action by the Commission is warranted. Accordingly, the matter has been closed. The Commission may at any time take such further action as the public interest may require." under that section in the usual form will be issued forthwith. However, in consideration of Respondent's application for a 10-day stay and Complainant's agreement thereto, the Postmaster at Hollywood will be instructed not to apply the order until the tenth day after he receives it.