In the Matter of the Complaint Against

HAUSER, INC., HAUSER INTERNATIONAL, INC.,
3198 J Airport Loop Drive at
Costa Mesa, CA 92626

P.S. Docket No. 7/77

November 21, 1979

William A. Duvall Chief Administrative Law Judge

Daniel S. Greenberg, Esq.,
Law Department
United States Postal Service
Washington, DC 20260, for Complainant

Donald Segretti, Esq.,
4910 Birch Street, Suite 200,
Newport Beach, CA 92660, for Respondent

Before: William A. Duvall, Esq.,
Chief Administrative Law Judge

INITIAL DECISION ^1/

On August 10, 1979, the Consumer Protection Division of the Law Department United States Postal Service, Complainant, filed a Complaint alleging that Hauser, Inc., and Hauser International, Inc., at Costa Mesa, California, 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 39 United States Code, Section 3005.

In the Complaint it is alleged that Respondent attracts attention to its scheme by means of advertisements appearing in publications of general circulation and advertising circulars which induce the reader thereof to remit money or property through the mails.

Attached to this decision as Appendices A and B are copies of advertising materials used by the Respondent which are alleged to be typical of those referred to in the preceding paragraph. (CX-1&-2; another ex. to Complt. (CX-3) is not attached)

There was not introduced into evidence any other advertising material used by Respondent. There is, therefore, no showing that the advertisements which are attached to the Complaint are typical of others used by the Respondent.

It is further alleged in paragraph 3 of the Complaint that by means of such materials, and that phrase "such materials" would mean Appendices A and B to this decision, Respondent represents directly or indirectly, in substance and effect, whether by affirmative statements, omissions or implications, that:

(a) PAR-O-STAR will stop excessive hair loss, often after the first treatment, with a success rate of over 90%;

(b) PAR-O-STAR will regenerate dormant hair roots and cause hair to grow again with a success rate of over 60%;

(c) PAR-O-STAR is a new scientific breakthrough;

(d) PAR-O-STAR is effective in treating the type of baldness pictured in Respondent's advertisement, i.e., male pattern baldness; and

(e) Any purchaser who is dissatisfied with PAR-O-STAR may return it to Respondent within ten days and receive a prompt refund.

The Complainant recognized the fact that no proof was introduced with respect to charge 3(e) of the Complaint and the Complainant withdrew that charge. It will no longer be the subject of any consideration.

In the fourth paragraph of the Complaint, it is charged that the foregoing representations are materially false as matters of fact.

In the Answer to the Complaint, Respondent admits that it is doing business under the names and at the address set forth in the caption of the Complaint but 20 a respondent an the of Each and every other allegation in the Complaint, except that Respondent admits that any purchaser from Respondent who is dissatisfied with Par-O-Star may return it to the Respondent within 10 days and receive a prompt refund.

At Respondent's motion, a hearing in the matter was held in the Los Angeles, California, area.

FINDINGS OF FACT

1. Based on Respondent's advertisements, as illustrated by Appendices A and B to this Complaint, together with Respondent's stipulation that it sells its products through the mails, I find that the Respondent is engaged in conducting a business for obtaining money or property through the mails.

2. The products involved in this proceeding are called Par-O-Star Liquid and Par-O-Star Friction. These products contain, as shown by the labels on the containers of the respective forms in which it is sold, the following ingredients:

Par-O-Star Liquid contains Hydantoinderivate, Inositol, Alantoine, Sulfur-containing amino acids, extracts of medicinal plants, FDA-approved color (FD&C), Perfume and distilled water added.

Par-O-Star Friction contains 3-Pyridinecarboxylic acid, hexil ester, Inosit, Alantoine, Quaternium-7, Aspartic acid, Perfume, Alcohol 35%, Water added.

3. a. Based in part on Finding of Fact No. 1, I find that Respondent represents that Par-O-Star will stop excessive hair loss, often after the first treatment, with a success rate of over 90 percent. A sample portion of Respondent's advertising supporting this finding is found in Complainant's Exhibit 1, which is Appendix A, in the following language:

"GROW HAIR 90% SUCCESS

NEW SCIENTIFIC BREAKTHROUGH FROM SWITZERLAND HAS OVER 90%

SUCCESS IN STOPPING EXCESSIVE HAIR LOSS, OFTEN AFTER THE FIRST

TREATMENT."

b. Based in part on Finding of Fact No. 1, I find that Respondent represents that Par-O-Star will regenerate dormant hair roots and cause hair to grow again with a success rate of over 60 percent. The portion of Respondent's advertising material which provides support for this finding is found in Appendix A in the following language:

"Par-O-Star stops excessive hair loss and controls the undesirable conditions which can prevent the regeneration of dormant hair roots."

Another excerpt from Respondent's advertising which supports this finding is the language as follows:

"Better than 60% success in regrowing hair with the use of PAR-O-STAR."

c. finding of Fact No. 1, I find that Respondent represents that Par-O-Star is a new scientific breakthrough. The portion of Respondent's advertising material which provides additional support for this finding is found in the words, again from Complainant's Exhibit 1:

"NEW SCIENTIFIC BREAKTHROUGH FROM SWITZERLAND."

d. Based in part on Finding of Fact No. 1, I find that Respondent represents that Par-O-Star is effective in treating the type of baldness pictured in Respondent's advertising, that is, male pattern baldness. Additional support for this finding is found in the photographs in the upper left-hand portion of Complainant's Exhibit 1. (See, also, Gurevitch, Tr. 96)

4. The representations heretofore found to have been made are material representations because they are statements which by their content and character would cause persons to remit money to the Respondent to order the products.

5. The Complainant relied on the testimony of Arnold W. Gurevitch, M.D., to support its charge that the representations made by Respondent are false. Dr. Gurevitch received his A. B. degree at Harvard University in 1958 and his M.D. degree at the University of California School of Medicine in Los Angeles in 1962. He received his certification as a Diplomate in the American Board of Dermatology in September 1967. He is presently Adjunct Professor of Medicine in Dermatology at the UCLA School of Medicine, Los Angeles, California. And he is Chief of the Division of Dermatology, Harbor General Hospital Campus of the UCLA School of Medicine at Torrance, California. The impressive background of this witness is found in more detail in Complainant's Exhibit 6.

6. a. Based upon Dr. Gurevitch's testimony, I find as follows: There are generally two broad types of baldness; a scarring type which may be caused by a variety of diseases or trauma, and a nonscarring type which is known as male pattern baldness. The scarring type of baldness can, but seldom does, affect the entire scalp. It usually occurs in smaller areas and is called alopecia areata. The nonscarring type of baldness generally begins with a receding frontal hairline, later accompanied by a balding spot near the back of the top part of the head. And the process is completed when those two areas of baldness join, leaving a fringe of hair around the head.

b. Male pattern baldness is the type of baldness which is by far the most common. Among bald men it accounts for about 95 percent of the cases of baldness. This type of baldness occurs also in women but with much less frequency - in only about 20 to si Jilose their hair. Women tend more to have diffuse thinning of the hair on the top of the head rather than complete baldness in one area. Male pattern baldness is considered to be influenced by heredity and it also results from hormonal influences.

Transplantation is the only recognized remedy for male pattern baldness.

c. Each hair has a cycle of existence. First there is the growing stage called the anagen stage, which consumes about 85 percent of its cycle. This is followed by a middle, very short, period called the catagen stage. Finally, there is the telagen stage, or resting stage, which occupies the last roughly 14 to 15 percent of the time cycle. In the last stage, the hair remains in the follicle, but it shrinks and shrivels. When the next cycle takes place, the new hair pushes out the old hair.

d. In alopecia areata, the hairless spots vary in size. It may occur in persons of any age. And in 60 percent of the cases, the hair will spontaneously regrow. Its causes are unknown but it is possible that it is caused by an allergy to one's own hair follicles. It may be due also to emotional stress, traction stress, such as that resulting from the habit of pulling or twisting at a lock of hair, pregnancy, high fever, and other factors. The use of hair bleaching and curling and setting preparations may cause spot baldness, brittleness and the breaking of hair. If the use of these products is stopped, hair frequently will resume its growth.

e. Not all cases of alopecia areata respond to the same treatment. Cortisone injections are sometimes used, and in very severe cases internal ingestion of cortisone is prescribed. Topical preparations are used. It has been found that in order to produce hair growth, a product topically applied must first produce a dermatitis. This statement by Dr. Gurevitch is supported by Respondent's Exhibit 1, which is a report by Drs. Pascher, Kurtin and Andrade, appearing in Vol. 141 of Dermatologica, 1970, pages 193 to 202, especially beginning at page 197. This portion of this report reads as follows, or may be paraphrased as follows:

There is mention of two types of folliculitis, inflammation of the follicle, which occurred when using a topical application. One type of this inflamstion takes the form of "superficial pustules which receded despite continued treatment***". The second type was an "acneiform eruption." With the latter type condition, "Treatment had to be suspended for a few days from time to time to alleviate the acneiform reaction." Quoting from the bottom of page 197, it is stated:

"Despite the severity of the latter response in some cases, healing without visible sequelae followed within a period of two to three months once treatment was terminated."

On page 198, there is the statement:

"While the acneiform response was limited to individuals between the ages of 15 and 25, superficial follicular pustules were observed at all ages."

f. Dr. Gurevitch, in his practice, has treated patients for various forms of baldness. He knows other recognized and qualified dermatologists who also treat such patients. The ingredients which Respondent claims to be in his product, and a listing of them was read to Dr. Gurevitch during the course of his cross-examination, are not used by Dr. Gurevitch in his treatment of bald patients. Furthermore, he knows of no qualified, reputable physician who does use these ingredients in the treatment of baldness. Nowhere are these ingredients mentioned in the reputable scientific medical literature.

g. Dr. Gurevitch's testimony represents the consensus of informed medical and scientific opinion in the area of medicine concerning which he testified and with which this hearing is involved.

7. Respondent called to testify on its behalf a number of lay witnesses, who testified in substance as follows:

a. Dr. Marion McKee, who holds a Doctorate in Theological Psychology. Dr. McKee, who is 60 years old, had had excessive dandruff for over 40 years, and for some undefined period of time he had had excessive loss of hair. He began to use the Par-O-Star Liquid and said that after using it for three and a half to four months, he regarded the treatment as being very successful in terms of stopping his loss of hair and controlling his dandruff.

b. Mr. Richard Edward Wilker, 39, is an Applications Engineer. Mr. Wilker had a receding hairline on the left side of his head in the area where he parted his hair. He began to use the product in early 1977, that is in January, February or March of that year. He used Par-O-Star two or three times a week and noticed that improvement began in about August of 1977. He states that he has little curly hair grow in previously bald areas and there is no more hairline recession.

c. Mrs. Wanda Joyce Harrison, age 41, has used Par-O-Star for about one and one half years following an automobile accident in which she received a blow on her head. At the site of the injury, the hair grew very slowly and looked like straw. She said that it was quite brittle and broke very easily. She used Par-O-Star all over her head and she said that she now has an equal growth of hair of good quality all over her head.

d. Dorothy Ann Berseth used to bleach her hair and found that it began to fall out. Also, the beautician would tease her hair when she went for an appointment. She has used Par-O-Star since about June of 1977. At that time she also stopped bleaching her hair. In about six months, her hair started to regrow and the texture of her hair was finer. Hair loss was also arrested.

e. Mrs. Julia Kocevar, 63, bleached her hair for over 30 years. Her hair was falling out and her hairline had receded from its normal location for a distance of about three to four inches. And she also had bald spots. She never went to a dermatologist, but about three or four years ago she began to use Par-O-Star Liquid and Par-O-Star Friction. Regrowth of her hair started and hair loss decreased about three or four months after she started the use of these products. She continues the use of these products, and now she says that her hair grows so fast she has to go to the beauty parlor and have her hair bleached every two weeks because it grows so fast.

f. Mrs. Florence Karlik, the wife of the President of the Respondent corporation, had hair loss when she was pregnant. She has used Par-O-Star Friction one time a week and Par-O-Star Liquid every day for three years. The places from which hair had been lost on the sides of her head are now covered with a growth of new hair.

g. Mrs. Magdalena Pohl, who is the wife of the co-owner of the Respondent corporation, always lost hair after each pregnancy. She began to use the product about four years ago and she said that she feels that she now has more hair and that her hair is stronger and of order texture.

8. Mr. Olda Karlik, president of the Respondent corporation, holds a B.A. degree in Social Sciences from California State University at Long Beach, California. He has also completed three years of additional studies in the field of cooperative education at that institution.

The Respondent handles five or six of the 56 or 57 products manufactured by Hauser Laboratories of Zurich, Switzerland. The testimony in this record is limited to two of such products, Par-O-Star Liquid and Par-O-Star Friction. These products have been advertised and sold for the past 15 years and they are presently sold in 33 different countries throughout the world, although with the Civil War in Lebanon, the number of countries in which they are sold may be reduced to 32 as of this time.

Mr. Karlik received some training from Mr. Hauser, the originator of the products. Mr. Hauser is a chemist who has attended universities in Switzerland, England and France. Mr. Karlik related that he had bald spots on and under his chin. He attributed the presence of a beard now in the formerly bald places to his use of Par-O-Star Liquid and Par-O-Star Friction. Mr. Karlik has received testimonials from many purchasers, but in no case has he received a complaint that a user had developed dermatitis during the course of the use of the products in question.

Mr. Karlik observed the return of growth of his wife's hair and he saw a Mrs. Rosenbloom of The Bronx, New York, who told him that she attributed the increased thickness of her hair to the use of Respondent's products.

9. The anecdotal experiences of hair loss and hair regrowth related by Respondent's witnesses reasonably are explained as being within that 60 percent of the cases of alopecia areata in which spontaneous regrowth of hair occurs. In the case of the women, every witness told of events which have been noted as being precursors of alopecia areata, specifically, trauma, pregnancy, and bleaching, teasing, dyeing of the hair. As for the men, they present illustrations of that part of Dr. Gurevitch's testimony in which he said that alopecia areata may both occur and be corrected spontaneously without a specific cause of either event being determinable.

CONCLUSIONS OF LAW

1. The opinion of doctors, which is in concurrence with medical knowledge gained over years of experience, is entitled to great credence. Reilly claims. Pinkus , 338 U.S. 269.

2. The uncontradicted testimony of one qualified medical expert establishes a universality of medical opinion on the crucial issues. U. S. Health Club v. Major , 292 F.2d 665.

3. An advertisement must be considered as a whole and its meaning must be determined by the impression it creates upon the mind of the average reader.

"It is not each separate word or a clause here and there of an advertisement which determines its force, but the totality of its contents and the impression of the entire advertisement upon the general populace. *** The ultimate impression upon the reader results not only from the total of what is stated but also from what is reasonably implied." Vibra-Brush Corp. v. Schaffer , U.S.D.C., S.D.N.Y., 152 F. Supp. 561 at page 465.

4. Respondent makes the representations set forth in paragraphs 3(a), (b), (c) and (d) of the Complaint.

5. The evidence in this proceeding establishes that the representations found to have been made by the Respondent are material representations.

6. Respondent's said representations are false in fact.

7. 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.

Proposed findings of fact and conclusion of law submitted by the parties, together with their arguments, have been carefully considered. The proposed findings of fact and conclusions of law are adopted to the extent herein indicated. Otherwise, such proposed findings of fact and conclusions of law are rejected for the reasons stated, or because they are contrary to the evidence or because of their immateriality.

On a number of occasions, Respondent has alluded to the possibility that the action by the Postal Service may in some way have a dampening effect, or may in some way deprive the Respondent of the protection of the First Amendment right of freedom of speech. This decision sets forth the conclusion that in certain respects the advertising material of the Respondent consists of false representations.

In the case of Virginia State Board of Pharmacy, et al. v. Virginia Citizens Consumer Council, Inc., et al. 425 U.S. 748, it is stated, beginning at page 770, as follows:

"In concluding that commercial speech, like other varieties, is protected, we do not of course hold that it can never be regulated in any way. Some forms of commercial speech regulation are surely permissible."

On the following page, 771, there is the following statement, beginning at the bottom of the page:

"Obviously, much commercial speech is not provably false or even wholly false but only deceptive or misleading. We see no obstacle to a state's dealing effectively with this problem. The First Amendment, as we construe it today, does not prohibit a state from ensuring that the stream of commercial information flows cleanly as well as freely."

Finally, in a footnote, which is footnote 24 continued from the preceding page, there is a quotation from United States v. Ninety-Five Barrels of Vinegar , reported at 265 U.S. 438 at 443, a 1924 case, in which the Court stated:

"It is not difficult to choose statements, designs and devices which will not deceive."

Respondent's representations have been found to be false. Therefore, the protections of the First Amendment do not extend to such statements.

An order of the type provided by 39 U. S. Code Section 3005, substantially in the form attached, should be issued against this Respondent.

____________________

1/ This decision was rendered orally at the close of the hearing. It has been edited and transcribed for formal issuance.