In the Matter of the Complaint Against:

INTERNATIONAL LABORATORIES,
Box 41-4176 at
Miami Beach, Florida 33141

P.S. Docket No. 4/110

04/19/76

Duvall, William A., Chief Administrative Law Judge

Daniel S. Greenberg, Esq.
Law Department
United States Postal Service
Washington, D.C., for Complainant

No appearance made on behalf of Respondent

Before: William A. Duvall, Chief Administrative Law Judge

INITIAL DECISION ^1/

This proceeding was initiated on October 24, 1975, when the Postal Service, acting through the General Counsel, the Complainant, filed a complaint in which it is charged that International Laboratories at Miami Beach, Florida, the Respondent, is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations in violation of Section 3005 of Title 39, United States Code.

An answer to the complaint was received in the office of the Docket Clerk of the U.S. Postal Service on November 17, 1975. The answer is signed by Francis A. Rogers, President of the Respondent, International Laboratories, Incorporated. The substance of the answer is that the Respondent is not engaged in any scheme or device which offends the provisions of 39 U.S. Code 3005, but that the Respondent is engaged in the sale of a product which many users have indicated has caused them to grow hair where they otherwise were bald. With this answer the Respondent transmitted a number of exhibits that consist of newspaper stories about his hair growing enterprise, about his operations in real estate and about other irrelevant activities of Mr. Rogers.

Mr. Rogers also asked that the hearing be held in Miami, Florida, because the state of his health would not permit him to travel to Washington, D.C., and Mr. Rogers submitted a statement on the letterhead of one Santiago Pujals, M.D., of Miami, in which Dr. Pujals stated that due to Mr. Rogers' physical condition it was not advisable for him to travel North during the winter season.

There followed a period in which effort was made to correspond with Mr. Rogers, but the effort to conduct this correspondence was frustrated in large measure by the failure of Mr. Rogers to pick up mail addressed to him by the Postal Service.

Finally, on March 30, 1976, there was issued by the undersigned, a notice to the parties advising them as to the precise date, time and place at which this hearing would be conducted. This notice was mailed to Francis A. Rogers, 1461 Daytonia Road, Miami Beach, Florida 33141 by certified mail on March 30, 1976. On April 1, 1976, a notification card advising Mr. Rogers that a certified letter had been received for him and telling him, further, that he should pick up this letter was put in the box of the addressee. This card was picked up, but the letter to which the card referred had not been called for by the addressee as of this day, April 6, 1976.

This is therefore, another instance in which Mr. Rogers has failed, or refused, to pick up official mail relating to this case which has been addressed to him and the arrival of which at his Post Office has been made known to him.

The Rules of Practice governing procedures of this type provide, in part, that in cases in which an answer is filed by the Respondent, but the Respondent does not appear at the hearing, the presiding officer shall proceed to hear the Complainant's case and issue a decision based on the record thus made.

This morning, after the time for the convening of the hearing had come, repeated efforts were made to contact Mr. Rogers by telephone at both of the numbers shown on his letterhead. At one number a message was left pursuant to instructions on a recording device, which responds when that number is rung, advising Mr. Rogers that the hearing was about to begin. At the other telephone number, at each call there was no response other than the busy signal. It is not known whether someone was talking on that line over a period of time that extended for at least an hour, or whether the receiver had been removed from the hook. What is known is that at every call to the second number over a period of at least one hour, nothing was received except the busy signal.

Every reasonable effort has been made to contact Mr. Rogers and advise him of the hearing that has taken place. Under these circumstances, the provisions of the rule previously referred to will be followed and this matter will be decided on the basis of the record heretofore made.

The business in which this Respondent is engaged is the sale of a product, the use of which is said to help the user to grow hair.

Received in evidence as Complainant's Exhibits 1 and 2 are two advertisements used by this Respondent. These advertisements are short and both appear on Appendix A to this decision.

In the complaint it is charged that by means of these and similar advertisements, the Respondent falsely represents directly or indirectly, in substance and effect as follows:

"(a) That Respondent's unnamed product will enable the user to grow hair;

"(b) That Respondent's unnamed product will effect the result described in subparagraph (a), supra, irrespective of the cause of the user's lost or diminished ability to grow hair;

"(c) That Respondent's unnamed product will end all scalp problems."

In the case of Donaldson v. Read Magazine, 333 U.S. 178 at pages 188-189, the Court said:

"Advertisements as a whole may be completely misleading although every sentence separately considered is literally true. This may be because things are omitted that should be said, or because advertisements are composed or purposefully printed in such way as to mislead. (citing cases) * * * Questions of fraud may be determined in the light of the effect advertisements would most probably produce on ordinary minds. (citing cases) People have a right to assume that fraudulent advertising traps will not be laid to ensnare them."

In the case of Borg-Johnson Electronics v. Christenberry, 169 F. Supp. 746 at 751 (1959) the Court made the following statement:

"When it appears that an advertiser deliberately induces its patrons to purchase its product in the belief that its value far exceeds its true worth it is sufficient to support a finding that a fraudulent scheme was being conducted. Leach v. Carlile, 1922, 258 U.S. 138, * * *. This is so, even where there is a promise to refund the purchase price should the article sold prove unsatisfactory. (citing cases)"

Comparing the language of the charges in the complaint quoted above with the language of the advertisements appearing in Appendix A, it is clear that the charges do express the impression that would be made upon the mind of the average person by the language chosen by the Respondent and used in its advertising material, with respect to its product.

This matter was investigated principally by Postal Inspector Gene F. McHale who, as is usual in these cases, conducted test correspondence with the Respondent, and, in return for the required remittance of money, received the product being sold. The product comes in three forms, all of which were received in evidence, respectively, as follows:

1.Capillary Shampoo, Complainant's Exhibit 8.

2.Capillary Cream for Scalp Care, Complainant's Exhibit 9.

3.Capillary Lotion, Complainant's Exhibit 10.

Another witness called by Complainant was Mr. Robert Hall, who is an analytical chemist with the Food and Drug Administration located in Washington, D.C. Mr. Hall described the methods followed by him in performing his analysis, and he indicated that these methods are recognized by chemists, generally, as being valid for the purposes for which they were employed by Mr. Hall in this case.

With respect to the shampoo, Mr. Hall testified that it is comprised of 80 percent volatile material and 20 percent non-volatile material. The volatile material consists of water. The non-volatile material consists of propylene glycol, fatty acids, fatty acid esters and alkyl sulfate emulsifier. There are also contained in the shampoo certain plant fragments ranging up to about one millimeter in diameter which resemble a marine alga (seaweed) in the form and arrangement of their cells.

With respect to the Capillary Cream, it was Mr. Hall's testimony that the product consists of 70 percent volatile material and 30 percent non-volatile material. Again the volatile material consists of water. The non-volatile material is comprised of Beeswax, fatty acids, alkyl sulfate emulsifier with small amounts of phosphate silicate and propylene glycol. There is also included a fibrous, insoluble, vegetable material which consists of stem and leaf fragments ranging up to about one millimeter in length, some of which are fragments of a grass and some of which are alfalfa hairs.

It was the testimony of the chemist that the ingredients of all of Respondent's products consist of the same chemical substances but that these substances are present in different forms in some of the different products.

The last witness called by the Complainant was Dr. Paul R. Bergstresser, a doctor of medicine who, by virtue of his education, training, experience and occupation, is well qualified to testify with respect to the area of medicine which is involved in this proceeding. Dr. Bergstresser is a Dermatologist who has at times engaged in private practice and who at this time is a member of the faculty of the Department of Dermatology at the University of Miami School of Medicine, Miami, Florida.

The witness testified that there are two broad categories of baldness, namely permanent and temporary. The permanent category, the type which is by far the largest, is identified as male pattern baldness. This is the type of baldness which is experienced by 90 percent of the bald population. This type of baldness is manifested by a gradual and irreversible loss of hair. Permanent baldness may also result from cancer on the area of the skin where the baldness occurs. It may result from infections or inflammatory conditions of the skin and it may result from what the witness described as physical insults to the skin, examples of which are x-ray and other types of burns. People who experience male pattern baldness have inherited a genetic susceptibility to this condition. They encounter the condition as a concomitant of age and they usually have a normal level of male hormones. The typical appearance of one who has this condition is that of baldness beginning at the front of the head nd progressing toward the top and the back of the head.

The category known as temporary baldness is identified by the name of alopecia areata. In this condition, small circular areas develope in which the hair is lost. These areas may expand to cover the head and in some cases the entire body. A reversal may occur in this condition, but there is no known effective treatment. The hair simply inexplicably returns. Alopecia areata may, in some cases, resemble male pattern baldness. It occurs in some cases in persons who are subjected to severe psychological stress. Sometimes the use of tranquilizers provides relief. If the stress is relieved from other external causes, the relief from stress will sometimes be accompanied by a return of the growth of hair. Other cases of alopecia areata have been known to result from infections, the use of drugs, and endocrinal hormone disorders.

There have been instances in which persons have had alopecia areata, but the hair would begin to reappear. Sometimes this occurs when the individual is using a product which is represented as being capable of causing the regrowth of hair. In such instances it is the normal tendency of the individual to ascribe the regrowth of hair to the use of a particular product, but the fact of the matter is that the hair would have begun to return regardless of what product is being used, or if no product was being used.

Dr. Bergstresser examined the products received through the mail from this Respondent. He was further advised that the Respondent recommends that after using the lotion or cream twice weekly, the purchaser should rub in some stinging, harmless Vicks Vapor Rub to open the pores. Dr. Bergstresser stated, without hesitation or equivocation, that none of the ingredients in any of the Respondent's products if used as directed, would halt the loss of hair, or would cause the regrowth of hair. He did state that in some persons having alopecia areata the use as directed of Respondent's products would not alter fundamental processes involved, but that the following of the instructions might in some cases relieve patients' anxiety and thus permit hair to regrow. That is to say that the following of the Respondent's instructions could, in some instances, have a placebo effect.

The other causes of alopecia areata such as infections and use of drugs and hormone disorders require specific treatments and remedies, and the use as directed of Respondent's products would have absolutely no effect.

With respect to other scalp problems which persons may suffer, such as dandruff, psoriasis and seborrhea, the use of Respondent's products would have no more effect than the use of an ordinary anti-dandruff shampoo.

From the testimony that was received, from the exhibits that were received in evidence in this proceeding, it is clear that the Respondent in this proceeding is, as pointed out above in the Borg-Johnson case, deliberately inducing its patrons to purchase its product in the belief that the value of the product far exceeds its true worth.

Based on the record in this proceeding I make the following findings of fact:

One, the Respondent, International Laboratories, Miami Beach, Florida, advertises its product in publications of general distribution;

Two, in advertising its products the Respondent seeks remittances of money through the mails;

Three, in the advertising material employed by this Respondent in the sale of its products the Respondent makes the representations which are set forth in the complaint; and

Four, the representations made by this Respondent in the sale of its product are materially false as matters of medical fact.

It is concluded as a matter of law that the Respondent is engaged in conducting a scheme or device for obtaining money or property through the mails by means of false representations within the meaning of Section 3005 of Title 39, United States Code.

It follows that an order of the type provided in 39 U.S. Code 3005 should be issued against this Respondent.

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1/ Transcribed from oral decision as rendered at close of hearing held April 6, 1976. Minor changes have been made, but the substance of the decision is unchanged.