In the Matter of the Complaint Against

SPECTRON IND.,
P. O. Box 17200, at
San Diego, California 92117

P.S. Docket No. 2/8

William A. Duvall Acting Judicial Officer

ORDER ON APPLICATION FOR MODIFICATION OF STOP ORDER

This case has had a most unusual procedural history. It appears that after the issuance of the Initial Decision on April 13, 1973, the Respondent had attempted, prematurely on April 16, 1973, to go into Federal District Court in San Diego, California, to seek an order restraining the Postal Service from conducting an administrative proceeding to determine whether Respondent in the sale of a product called Spectron C-33 was engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations contrary to the provisions of 39 U.S. Code 3005.

An Initial Decision was issued on April 13, 1973, in which it was found that Respondent did, in fact, misrepresent its product and did thus obtain money through the mail. It was found that an order of the type provided by 39 U.S. Code 3005 should be issued against Respondent.

On April 16, 1973, a hearing was held in the Federal District Court in San Diego on a motion to dismiss Respondent's (then Plaintiff's) petition for the restraining order. During the course of the argument, Respondent's Counsel stated in substance and among other things, that many if not most of the remittances received by Respondent are produced by advertising other than that upon which the postal Service's charges were based. Respondent's Counsel stated that Respondent was prepared to identify advertising which is the source of such incoming remittances.

The Court, Judge William B. Enright presiding, declined to take any action, but indicated concern that the proposed mailstop order might be too broad in its scope since it would direct the return of all remittances for the product, regardless of the advertising medium that produced the remittances.

On April 24, 1973, Respondent filed a brief on exceptions to the Initial Decision, and this was answered in a reply brief filed on May 7, 1973, by Complainant.

On May 16, 1973, Respondent's Counsel filed a Motion to Reopen for Purpose of Taking Additional Evidence. The specific relief sought in this motion was that the Judicial Officer"order the hearing reopened for the presentation of additional evidence that solicitations are made to this particular post office box and address in question by other forms of advertisements not the subject of the complaint in question ***". This motion was opposed by Complainant's Counsel.

On June 19, 1973, Complainant moved to supplement the record by the addition thereto of a transcript of the proceedings had before Judge Enright on April 16, 1973.

On August 29, 1973, Complainant moved for the issuance of a remedial order which would specify the post office box to be affected by the order and that the order be limited so as to be effective only in respect to remittances received in response to the advertisement which appeared in Male Magazine (a copy of which was attached to the complaint), or any substantially similar advertisement which appeared in any other magazine.

Respondent opposed the last-mentioned motion filed by Complainant, stating, in substance, that " *** any Order that pertains to any other advertisements other than that specifically complained of" in the complaint would be overbroad.

On September 12, 1973, the Postal Service Decision was issued by the Judicial Officer. As the evidence required, the Judicial Officer, inter alia , sustained the Administrative Law Judge's findings that Respondent was

1. Falsely representing that its product will cure, among other things, male pattern baldness; and

2. Engaging in a scheme or device for obtaining money through the mails by means of false representations.

The Judicial Officer then issued an Order (No. 73-108) applicable only to mail addressed to P. O. Box 17200, since the evidence on solicitations by Respondent introduced at the hearing relates only to that Post Office Box. The Judicial Officer did state (J. O. Dec., p. 7):

"A showing that identifiable mail orders for Spectron C-33 are received from solicitations free from false representations could be a basis for requesting a narrowing of the order."

On September 24, 1973, Respondent, pursuant to 952.29 of the Rules of Practice (39 C.F.R. 952.29), filed a Motion for Modifica- tion of Order No. 73-108. Respondent asserts that the Order should be limited to remittances received in response to the advertisement attached to the complaint, although Respondent acknowledges that it is charged in the complaint that the Male Magazine advertisement "is typical of the advertisements Respondent causes to be published, in magazines of general circulation."

Respondent's motion contains, also, the following assertions (Motion, p. 2):

"Respondent can distinguish all sums received by mail as to the source of their advertisements and identify the funds being received as a result of the advertisement in Male magazine.

"Respondent has advertised in various media, including radio and television. His magazine advertisements state that there are to be no C.O.D.'s.

***"

Complainant filed, on October 1, 1973, only a cursory reply to Respondent's motion for modification of Order No. 73-108.

There are several interesting facets to the present situation, among which is the language of 39 U.S. Code 3005 as applied to the present situation. This provision of law authorizes the Postmaster General to take action if he finds that an individual is "obtaining money or property through the mail by means of false representations." The statute does not say that the "false representations" must be made throught the mails, but only that the remittances of "money or property" must be obtained through the mails. Certainly, under the companion statute in the Criminal Code (18 U.S. Code 1341) it is not necessary that false representations themselves be transmitted by mail, but it is sufficient if the use of the mails is caused by the defendant in furtherance of the scheme. U.S. v. Hopkins , C.A. Tenn. (1966); 357 F.2d 14; cert. den. 385 U.S. 858. Are these situations analogous?

A reasonable feeling has been clearly and accurately expressed by Senior Circuit Judge Medina in Lynch v. Blount , U.S.D.C., S.D.N.Y. (1971) 330 F. Supp. 689 at 693, when he said:

"*** If, in a given case such as the one now before us, the selling of some particular nostrum is the sole business in which plaintiff is engaged and the stop order will put him out of business, so much the better, if the proofs substantially support the finding that the false statements were made as part of a scheme to defraud."

This quotation leads to the final point, i.e., the question of "the proofs". It will be recalled that the Judicial Officer said in his decision (p. 7) that a "showing that identifiable mail orders for Spectron C-33 are received from solicitations free of false representations could be a basis for requesting a narrowing of the order".

The fact is that in the present posture of this case, Respondent has made no showing whatsoever in this regard. There are only the statements of Counsel as to the advertising in other magazines, and "in various media, including radio and television." (App. for Mod. of Stop Order, p. 2) At the very minimum, one would expect to find attached as exhibits to the modification application, copies of advertisements from other publications and copies of scripts used in radio and television advertisements. There were no such attachments and, hence, there is no evidence on which one may reach a judgment as to whether there is any basis for modification of Order No. 73-108.

Accordingly, because of the lack of evidence in support thereof, Respondent's application for Modification of Stop Order No. 73-108 is hereby denied without prejudice to its renewal accompanied by proper substantiation.