In the Matter of the Complaint Against

HEALTH GUARD
P. O. Box 1344 at
Hallandale, Florida 33009

P.S. Docket No. 6/114

06/27/79

Cohen, James A.

APPEARANCE FOR COMPLAINANT:
H. Richard Hefner, Esq.
Consumer Protection Office,
Law Department, U. S. Postal Service,
475 L'Enfant Plaza West
SW, Washington, D.C. 20260

APPEARANCE FOR RESPONDENT:
Joel Heim,
1420 Diplomat Parkway,
Hollywood, FL 33019

POSTAL SERVICE DECISION

Respondent has appealed from the Initial Decision of Administrative Law Judge Quentin E. Grant holding that Respondent is engaged in conducting a scheme for obtaining money or property through the mail by means of representations materially false in fact in violation of 39 USC § 3005. Respondent's timely appeal raises several issues, most of which relate to alleged procedural errors in the processing of the case, rather than the efficacy of its product. All of Respondent's contentions have been considered.

The first procedural error claimed to exist is that the complaint was filed against the trade name Health Guard as opposed to the corporation marketing the product, Diet Lake, Inc. This contention has previously been addressed and found to be without merit in The Doctor's Diet Plan, P.S. Docket No. 6/77 (Recon. denied, P.S. Dec. April 18, 1979); Vitahair, P.S. Docket No. 6/76 (Recon. denied, P.S. Dec. Jan. 26, 1979); and Everywoman's Water Pill, P.S. Docket No. 6/113 (P.S. Dec. May 31, 1979). In an order dated January 16, 1979, in Vitahair it was stated:

"The Complaint was filed against the trade name or trade style Vitahair. A trade name is a commercial signature applying to a business and its good will. Cf. Southwestern Bell Telephone Co. v. Nationwide Independent Directory Service, Inc., 371 F.Supp. 900 (W.D. Ark. 1974); Chayt v. Darling Retail Shops Corp., 175 F.Supp. 462 (D. Md. 1959) (which discuss the use of trade names). The use of the trade name was sufficient to place Diet Lake, Inc., through its president, Joel Heim, on notice of the filing of the Complaint and subsequent proceedings. Diet Lake, Inc., identified through its trade name, Vitahair, is a person within the meaning of 39 C.F.R. § 952.5 and the mail stop order as issued applies to the corporationa nd its principals."

The administrative decisions in The Doctor's Diet Plan, supra, and Vitahair, supra, were upheld by the United States District Court for the Southern District of Florida in Diet Lake, Inc, d/b/a Doctor's Diet Plan v. U. S. Postal Service, Case No. 78-6417-Civ -JE (May 3, 1979) and Diet Lake, Inc., d/b/a Vitahair v. U.S. Postal Service, Case No. 78-6436-Civ -JE (May 3, 1979). Like the cited cases, the complaint filed against the trade name Health Guard was sufficient to place Diet Lake, Inc., through its president, Joel Heim, on notice of the initiation of the proceeding and to allow it to make an appearance and defend against the charges of the complaint. Diet Lake, Inc. is a person within the meaning of 39 CFR § 952.5. Accordingly, there has been no denial of due process and the caption of the proceeding serves as no basis to dismiss the complaint.

Respondent also takes issue with the terms of the proposed Mail Stop Order attached to the Initial Decision. According to Respondent the Mail Stop Order has no number, date, or signature and improperly describes its product. The Mail Stop Order attached to the Initial Decision is a recommended order and, if issued, will contain a number, date, and signature and will refer to Respondent's products in the most precise descriptive terms as is possible.

Respondent next argues that the issuance of a Mail Stop Order interferes with an implied contract between it and its customer and "cannot be broken without trial by jury under the Constitution." The Constitutional questions raised by Respondent have been addressed in prior court cases and the statute under which this proceeding was instituted, as well as the proceedings conducted pursuant to the Rules of Practice in Proceedings Relative to False Representation and Lottery Orders, 39 CFR, Part 952 have been found to be constitutional. See Donaldson v. Read, 333 U.S. 178 (1948); Hollywood House International, Inc. v. Klassen, 508 F.2d 1276 (9th Cir. 1974) and cases cited therein. Accordingly, Respondent's contentions in this regard provide no basis for relief.

Respondent questions the propriety of Administrative Law Judge Grant assigning this case to himself. At the time Judge Grant assigned this case to himself he was serving as Acting Chief Administrative Law Judge. There is no evidence that Judge Grant was not properly serving as Acting Chief Administrative Law Judge, or that the assignment was not performed on a rotational basis, as required by the Administrative Procedure Act, 5 USC § 3105, and the Rules of Practice in Proceedings Relative to False Representation and Lottery Orders, 39 CFR, § 952.17(a).

Respondent claims that because the hearing had been changed at its request to a location in Florida it could not thereafter be rescheduled to be held in Washington, D.C. Respondent was given sufficient time to respond to Complainant's "Motion to Reschedule Hearing" in Washington, D.C., but from the facts recited in connection with Respondent's next contention, it is clear it failed to do so. In the absence of such a response, the action taken by the presiding Administrative Law Judge in scheduling the hearing for Washington, D.C. was proper. Moreover, Respondent was given an opportunity to have the evidentiary hearing held in Miami, FL, but chose to forego this hearing in favor of a consent agreement. Its subsequent failure to execute the consent agreement places on it the burden of justifying a second hearing in the Miami area. This burden has not been met even though Respondent claims it was not its fault the consent agreement was not executed. According to Respondent it refused to execute the consent agreement because Postal Service counsel had agreed to call Respondent on August 23, 1979, to discuss other matters, but had failed to do so, and Respondent did not wish the consent agreement to serve as a precedent for other pending cases. A general outline of the settlement agreement was read into the record at the hearing on August 29, 1978. Complainant sent to Respondent a copy of a consent agreement which reflects the understanding read into the record at the time of the initial hearing. Thus, whatever the reason, Respondent chose not to execute a consent agreement which reflected the understanding reached at the hearing. It, therefore, must accept whatever reasonable inconvenience is caused by its actions.

Respondent argues it did not receive proper notice of the hearing scheduled to be held on December 6, 1978, in Washington, D.C. The facts of record do not support Respondent's position. A hearing was held in this proceeding in Miami, Florida, on August 18, 1978. At the commencement of the hearing the parties advised the presiding officer that they had settled their differences and that an evidentiary hearing was unnecessary. The proceeding was continued in order to allow the parties to finalize their settlement in the form of a consent agreement. The consent agreement was never executed and on September 25, 1979, Respondent filed its "Motion to Reschedule Hearing." The presiding Administrative Law Judge, having received no response to the motion within the time allowed, issued an order on October 25, 1978, setting the hearing for November 7, 1978, in Washington, D.C. The notice of hearing was sent to Respondent by certified mail to Respondent's Post Office Box, but returned unclaimed to the Docket Clerk on November 24, 1978. In the meantime, on November 1, 1978, a letter from Respondent dated October 18, 1978, was received. This letter requested an extension of the period to respond to Complainant's "Motion to Reschedule Hearing" in Washington, D.C. The letter states:

"Your order of September 28th giving us till October 10th to respond was just picked up a t the Post Office today.

This was due to the Jewish Religious holidays we have spoken about before. We would appreciate the courtesy of your giving us whatever the customary period is to respond to this order."

The letter was signed by Carol Gold for Joel Heim. In response to this letter, the presiding Administrative Law Judge issued an order dated November 2, 1978, granting Respondent until November 15 to file its response to Complainant's motion and continued the hearing indefinitely. The order dated November 2, 1978, was transmitted to Respondent by certified mail but returned to the Docket Clerk on November 27, 1978, as unclaimed. On November 22, 1978, the presiding officer issued the following order:

"By order dated November 2, 1978, respondent was given to November 15 to file its response to complainant's motion to reschedule the hearing in this matter. To date no response has been received.

The hearing is scheduled to commence at 10:00 AM on December 6, 1978, in Room 10811, U.S. Postal Service, 475 L'Enfant Plaza West, S.W., Washington, D.C. 20260."

This order was sent to Respondent by certified mail and was signed for by Respondent on December 7, 1978. On November 30, 1978, the presiding Administrative Law Judge issued the following order:

"On November 27, 1978, there was returned to the docket clerk as "unclaimed" an order issued by the undersigned on November 2, 1978, continuing the hearing in this matter indefinitely and giving respondent until November 15, 1978, to file a reply to complainant's motion to reschedule the hearing. I enclose a copy of the order of November 2 herewith.

I also enclose a copy of another order issued on November 22, 1978, scheduling a hearing for December 6, 1978, in Washington, D.C.

The failure to claim mail at respondent's post office box will not excuse respondent's appearance at the hearing or furnish the basis for further continuance of this matter."

This order was sent to Respondent at its Post Office Box by certified mail on November 30, 1978, and on the same date by express mail service to Respondent's home address. This order was received by Respondent on Friday, December 1, 1978, as is evidenced by its letter of December 4, 1978. On December 6, 1978, the hearing was held without Respondent being in attendance.

On these facts I find no merit in Respondent's contention that it was not properly served with the notice of hearing. Proper service of the notice of hearing was attempted on three occasions and was successfully accomplished on December 1, 1978, even though Respondent's representative may have been out of town on that date. Previous attempts to serve Respondent with the notice of hearing and various other documents failed because Respondent did not pick up its mail. Respondent alleges it was unable to pick up the mail because of confusion on the part of the Hallandale Post Office as to how Respondent's mail was to be handled. This bare allegation is insufficient to persuade me that, in fact, confusion existed which prevented Respondent from obtaining its mail at the Hallandale Post Office.

Respondent next takes issue with the testimony of Complainant's expert witness. The witness was competent to testify on the efficacy of Respondent's product and it was proper to rely on the testimony of the witness in the absence of any contradictory testimony. Accordingly, the findings of the Initial Decision were properly based on the testimony of Complainant's expert.

Respondent also asks that summary judgment in its favor be granted because of alleged Freedom of Information Act violations on the part of the Postal Service. The Freedom of Information Act does not provide any basis for relief in an appeal from an Initial Decision issued under 39 USC § 3005. As held in prior cases, the Judicial Officer has no authority under the Freedom of Information Act. The Doctor's Diet Plan, P.S. Docket No. 6/77 (Recon. denied, P.S. Dec. April 18, 1979); Vitahair, P.S. Docket No. 6/76 (Recon. denied, P.S. Dec. Jan. 26, 1979).

Respondent alleges that Judge Grant allowed it only two days to prepare two cases for trial and that such short notice is unconstitutional, unfair and unethical. The same contention was addressed in Everywoman's Water Pill, P.S. Docket No. 6/113 (P.S. Dec. May 31, 1979). Everywoman's Water Pill was scheduled for hearing on August 17, 1978, the day preceding the date originally set for hearing in this case. In the decision in Everywoman's Water Pill, supra, it was stated that Respondent was given proper notice of the hearing and allowed sufficient time to prepare therefor. The same is true in this case. Moreover in this case, the parties agreed to enter into a consent agreement and no evidence was taken at the hearing. Thus, Respondent could not have been prejudiced by the alleged "short notice."

Accordingly, Respondent's appeal is denied. A remedial order under 39 USC Section 3005 is being issued contemporaneously with this decision.