In the Matter of the Complaint Against

REJUVNIR, INC.
1905 High Place at
Santa Monica, California 90404

P.S. Docket No. 3/105;

APPEARANCES:
Lee H. Harter, Esq.
Law Department
U. S. Postal Service
Washington, D.C. 20260
for Complainant

John Joseph Matonis, Esq.
2603 P Street, N.W.
Washington, D.C. 20007
for Respondent

POSTAL SERVICE DECISION

The subject proceeding is before the Judicial Officer for a final agency decision. In accordance with the recommendation of the Chief Administrative Law Judge joined in by Complainant, the undersigned presided at the hearing and the proceeding was expedited for good cause shown. The proceeding was initiated on October 25, 1974, when the Consumer Protection Office of the General Counsel's office of the United States Postal Service filed a Complaint in which it charged that Rejuvnir, Inc., at Santa Monica, California, is engaged in conducting a scheme or device to obtain money or property through the mails by means of false representations in violation of 39 U.S.C. § 3005.

Questions of the pertinent statute and implementing regulations, raised initially in the Answer, but not argued at the hearing, have been put to rest in any event by cases like Lynch v. Blount, 330 F.Supp. 689 (1971), aff'd 404 U.S. 1007 (1972), and United States Postal Service v. Beamish, 406 F.2d 804 (1972).

The representations alleged to be false are set forth in paragraph III of the Complaint to include:

"A. That Respondent's product--

1. reduces wrinkles in depth and width 30-60%;

2. reduces 'jowls';

3. reduces 'bags' on facial skin;

4. eliminates brown spots, commonly known as age spots or liver spots;

5. clears acne within weeks;

6. smooths acne scars; i.e., the scars are reduced in depth;

7. decreases the size of keloids.

"B. That Respondent's product has an 'anti-aging effect' by decreasing the metabolic age of the cells;

"C. That the results attributed to Respondent's product and described in paragraph III, A and B supra, are permanent or near permanent; e.g., Respondent's product is a biological action and not a physical and readily reversible action.

"D. That complete details of Dr. Frank's methods and results using this product are described and documented in his book, Nucleic Acid Therapy in Aging and Degenerative Disease. (3d Ed.)"

Attached to this decision as Appendix A-1, 2 and 3 respectively, are copies of the advertisement used by Respondent together with the literature and order form a reader receives for responding to the advertisement. Copies of these documents were attached to the Complaint in this case and originals were introduced in evidence at the hearing.

Respondent's Answer in paragraph 8 admits all of paragraph III above except subparagraphs A-5 and A-6 and subparagraphs B, C, and D. It neither admits nor denies subparagraph A-5. As to the paragraphs admitted in the Answer, I find such representations were in fact made by Respondent.

I find that the representations alleged in subparagraphs 5 and 6 of the Complaint were in fact made. In support thereof the following paragraph from Appendix A-2 is quoted in full:

"The creme is also active in acne, and in my opinion, is just as active or more than any other used. It usually clears it up beautifully in several weeks and in mild to moderate cases, sooner. Also there is a smoothening of the skin in cases of acne scarring and pitting."

The representation alleged in subparagraph III-B of the Complaint is found to have been made by Respondent, witness the following excerpts from Appendix A-2:

"Nucleic acid deposited in the skin will lower the metabolic age of the skin cells. My creme was formulated to accomplish this."

"A doctor who doesn't care a whit about facial lines, except as they punctuate the aging process has developed a creme which decreases the metabolic age of the skin--and the sags and wrinkles--for a younger, healthier appearance".

"The creme is a nutritional creme which contains nutrients especially adapted for skin cells, all of which are natural. The action of the creme was designed to help bring about an anti-aging action on the skin cells, and thus, the whole skin. It is a biological action and not a physical and readily reversible action."

The representation alleged in subparagraph III-C of the Complaint is found to have been made by Respondent, witness the following from Appendix A-2:

"The action of the creme was designed to help bring about an anti-aging action on the skin cells, and thus, the whole skin. It is a biological action and not a physical and readily reversible action."

The representation alleged in subparagraph III-D of the Complaint was withdrawn by Complainant at the hearing of this case. Therefore, this representation is not at issue.

This brings us to the crucial question of whether any of these representations are materially false. In connection with this issue Respondent did not present any witnesses or documentary evidence. Its stated principal reason for not presenting witnesses was in the nature of a fifth amendment defense that if it produced witnesses to testify to the truth of the representations then there conceivably could be a violation of criminal laws related to the Food,Drug and Cosmetic Act (T. 95). It is, of course, Respondent's right not to produce any witnesses in its own behalf if it so elects and to leave the Complainant to carry the burden of proof in establishing that the representations were false.

Complainant produced as a witness at the hearing Dr. Robert J. Carnathan, M.D., a Board certified dermatologist and presently a clinical assistant professor of medicine (dermatology) at Georgetown University Medical School. Dr. Carnathan's qualifications as an expert in the field of dermatology are well supported in the record and it is upon his testimony that I base my factual conclusions regarding the truth or falsity of the representations made by Respondent.

In Dr. Carnathan's opinion Respondent's product would not reduce "wrinkles", "jowls" or "bags" of facial skin since no topically applied product can do this. Assuming Respondent's product contained ribonucleic acid (RNA) and deoxynbonucleic acid (DNA) the doctor would reach the same result. With respect to brown age spots or liver spots, Dr. Carnathan's opinion was that a cream might improve a condition of scaliness but even so the discoloration would not be affected. This could be accomplished with an agent known as hydroquinone. There is no indication that hydroquinone was or was not present in the cream as no laboratory analysis was made. However, Respondent's advertising claim is that the cream contains "no drugs". With respect to acne, Dr. Carnathan explained that this is treated with a drying agent rather than a cream and whether the particular cream contained or did not contain RNA or DNA would make no difference in his opinion. Dr. Carnathan testified that he knew of no way of completely excluding acne scars although the more superficial ones can sometimes be flattened out by freezing or a dermabrasion technique. However, the average scar in acne is an ice-pack type scar very hard to remove. The representation made by Respondent is quite positive in stating "also, there is a smoothening of acne scarring and pitting." The impression this gives is completely inconsistent with the doctor's testimony.

As to the representation that the cream reduces the size of keloids, Dr. Carnathan was of the opinion that even if DNA or RNA entered the skin, which he did not believe possible, it would not affect the production of collagen which causes keloids, and would not reduce the size of keloids. He testified that a high potence cordicosteroid cream might possibly have some effect but this is a prescription drug. I find that all of the representations referred to in paragraph III-A of the Complaint are materially and substantially false.

The representation that the cream reduces the size of keloids, Dr. Carnathan was of th opinion that even if DNA or RNA entered the skin, which he did not believe possible, it would not affect the production of collagen which causes keloids, and would not reduce the size of keloids. He testified that a high potence cordicosteroid cream might possibly have some effect but this is a prescription drug. I find that all of the representations referred to in paragraph III-A of the Complaint are materially and substantially false.

The representation referred to in paragraph III-B of the Complaint that Respondent's product has an anti-aging effect by decreasing the metabolic age of the cells is also found to be materially and substantially false. Dr. Carnathan testified that he knew of no way that differentiation in skin cells would be effected by Respondent's product even if the DNA or the RNA could get into the basic layer of the epidermis. It was conceivable to him that the product, if it contained a sufficient amount of water and greasy material, could hydrate the surface of the skin and improve its ability to hold water but this effect, even if achieved, would not be permanent. This lone possibility hardly equates to an anti-aging effect.

The representation referred to in paragraph III-C of the Complaint that the results described in the representation contained in paragraphs III A and B are permanent or near permanent is also found to be materially and substantially false as it is premised on representations found to be false. By order issued December 12, 1974, and received by Counsel for both parties that date, the parties were notified that they should be prepared to submit, either orally or in writing, proposed findings of fact and conclusions of law, together with supporting reasons, at the close of the taking of testimony. Neither party presented such in writing electing instead to present oral argument. Respondent's argument at the hearing boiled down to two major arguments, the first being that the Complainant had not carried its burden of proof in establishing that the representations were false and the second being an objection to the expedited hearing and a request for further item in which to file written proposed findings of fact and conclusions of law. The latter request was denied by the undersigned as the presiding officer. Respondent had its opportunity at the hearing, after advance notice, to present written proposed findings of fact and conclusions of law and did not do so. The undersigned as presiding officer could have issued an oral final decision at the conclusion of the hearing and the parties were so advised in accordance with § 952.24 of the Rules of Practice. That an oral decision was not then rendered does not alter the situation. With respect to the contentions that Complainant has not carried its burden of proof in establishing the falsity of the representations, I have concluded to the contrary as shown by my findings on this issue contained in an earlier portion of this decision.

With respect to its objection to an expedited hearing, Respondent argues that the resort to an expedited hearing in this case violates its rights and is discriminatory and prejudicial to it. In support of this contention it points to a number of Postal Service misrepresentation cases which proceeded to final Postal Service decision without resorting to an expedited hearing. For whatever reason expedited hearings were not requested in the particular cases cited by Respondent, the question of whether such an expedited hearing is permissible is beyond doubt, as the Rules of Practice in 39 C.F.R. 952 specifically provide for such, upon good cause shown. This is consistent with the Administrative Procedure Act, 5 U.S.C. 556, which expressly provides that the agency may preside at the hearing and 39 U.S.C. 304 which expressly provides that the Judicial Officer shall be the agency for such purposes.

It is not necessary, as Respondent suggests, that there be a danger to health or safety, or a showing of any large amount of economic import if the hearing were not expedited. In this case there was serious question regarding Respondent's delay of the normal proceedings, as clearly indicated by the contents of the documents in this record. My decision of December 11, 1974 not to issue a mail stop order under 39 U.S.C. 3005 because of Respondent's failure to file an Answer in accordance with the published Rules of Practice was not based upon excusable cause but rather upon a matter of administrative grace to afford Respondent an opportunity, despite its past actions, to offer a meritorious defense to the allegations in the Complaint. In addition there was for consideration the conceivably severe prospect of a possible suit by Respondent against its Counsel if Respondent did not participate in and condone Counsel's actions leading to the issuance of a mail stop order on default. In my opinion the scale tipped in favor of not issuing the order at that time and at the same time the recommendation for an expedited hearing, considering all of the circumstances, has sound justification. After the hearing, Respondent filed three motions on December 19, 1974. The first motion is a motion for leave to submit written proposed findings of fact and proposed conclusions of law and supporting brief. It reasons in support thereof are that the decision to be issued will be the final decision of the U.S. Postal Service; that it considers briefing necessary to argue the issue that the proof adduced at the hearing on December 17 was sufficient to carry Complainant's case; and that there is no harm to the public sufficient to deny the additional time required for filing written briefs. This motion was made by Respondent at the hearing and denied at that time by the undersigned as presiding officer for the reasons stated previously. No basis is found to reverse that ruling.

The second motion is a motion for the issuance of a tentative rather than a final decision by the Judicial Officer. The reasons given in support of this are that the Judicial Officer denied Respondent's motion at the hearing for an extension of time in which to file, after the hearing, written proposed findings of fact and conclusions of law and that "a tentative order would allow comments and exceptions necessary to preserve the record". It is within the discretion of the Judicial Officer to issue either a tentative or final decision in such matters. In my judgment, after a thorough consideration of the record as a whole, this case warrants the issuance of a final decision.

Respondent's third motion is for leave to file a motion for reconsideration before an order is issued under 39 U.S.C. 3005. In support thereof Respondent refers to 39 C.F.R. 952.27 permitting the filing of a motion for reconsideration within ten days after receipt of a final agency decision. The Rules of Practice do not provide for a right to a stay of execution of the order under 39 U.S.C. 3005 pending filing of a motion for reconsideration or action thereon. However, the Judicial Officer has authority to stay such orders. Complainant, in reply to Respondent's motions, requests a final order under 39 U.S.C. 3005 but states it has no objection in this case to suspension of a § 3005 order during the period of reconsideration of a decision upholding the Complaint, provided that a mail detention order is issued applicable to mail directly related to the sale of "Dr. Frank's Nutritional Facial Creme" or "Dr. Frank's Nutritional Skin Creme", the product in question here.

Conclusion

The charges of misrepresentation are found to be both materially and substantially false as indicated above and Respondent is found to be engaged in a scheme or device for obtaining money through the mails by means of false representations in violation of 39 U.S.C. 3005. Accordingly, a remedial order as authorized by that law is being issued simultaneously with this decision. Respondent's motions filed on December 19, 1974 are hereby denied. However, in view of Complainant's suggestion regarding a partial suspension of that order and because I believe that the public interest will be served by so doing I am issuing a supplement to the order temporarily staying execution of only that part of the order which requires return of mail to senders, and notice to remitters regarding refunds of Postal Money Orders, pending further order of the Judicial Officer. In this way Respondent's mail and remittances found to be directly connected with the violation of 39 U.S.C. 3005 will be detained. Respondent has ten days from receipt hereof in which to file a motion for reconsideration with supporting brief in accordance with § 952.27 of the Rules of Practice. Should Respondent prevail on the motion for reconsideration, all mail will be released to it. Should it not prevail the supplemental order will be lifted and the order under 39 U.S.C. 3005 will go into full effect. In the interim the interests of the public will have been protected.

12/20/74

Lussier, Edward F.