March 03, 1989
In the Matter of the Complaint Against:
HEALTH CARE PRODUCTS, INC.,
P.O. Box 271448,
Tampa, FL 33688-1448
HEALTH CARE PRODUCTS, INC.
d/b/a ANDERSON PHARMACALS,
P.O. Box 271344,
Tampa, FL 33688-1344
P.O. Box 150,
Tampa, FL 3360l-0150
CAL-BAN or ANDERSON PHARMACALS,
P.O. Box 271266,
Tampa, FL 33688-1266
BARBARA W. LARKINS,
P.O. Box 271344,
Tampa, FL 33688-1344
15414 E. Burrell Drive,
Lutz, FL 33549-9999
P.O. Box 271448,
Tampa, FL 33688-1448
P.S. Docket No. 28/90
Cohen, James A., Judicial Officer
APPEARANCES FOR COMPLAINANT:
Jerry Belenker, Esq.,
Alan B. Ostroff, Esq.,
Consumer Protection Division,
United States Postal Service,
Washington, DC 20260-1100
APPEARANCE FOR RESPONDENTS:
Marion E. Harrison, Esq.,
840 The Watergate,
2600 Virginia Avenue, N.W.,
Washington, DC 20037-1905
POSTAL SERVICE DECISION
Respondents have appealed from the Initial Decision of an Administrative Law Judge which holds that Respondents are engaged in conducting a scheme or device for obtaining money or property through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.
The Consumer Protection Division, Law Department, United States Postal Service (Complainant), initiated this proceeding by filing a Complaint, subsequently amended, alleging that by means of television advertisements and advertisements in publications of general circulation, Respondents falsely represent that the use of the product Cal-Ban 3000 will cause significant weight loss without diet or exercise. Specifically, the Complaint alleges that Respondent Health Care Products, Inc., doing business under the names of Anderson Pharmacals and Cal-Ban 3000; Barbara Larkins as president of Health Care Products, Inc.; Carl Anderson, an individual involved in the conduct of the business of Health Care Products, Inc.; and Ronald Anderson, an individual acting as director of Health Care Products, Inc., falsely represent that: "8. . .
(a) Ingestion of Cal-Ban 3000 will cause significant weight loss in virtually all users.
(b) Ingestion of Cal-Ban 3000 will cause significant weight loss without discipline, calorie restricted diets, or exercise.
(c) Cal-Ban 3000 prevents food from being converted into stored fat.
(d) The weight loss claims for Cal-Ban 3000 are supported by the results of scientifically sound clinical studies.
(e) An obese person who takes Cal-Ban 3000 may reasonably expect to lose a significant amount of weight while continuing to eat all he or she wants."
In their Answer to the Complaint, Respondents admit that Health Care Products is a corporation doing business as Anderson Pharmacals and Cal-Ban 3000; Barbara Larkins is the president of Health Care Products, Inc., Anderson Pharmacals, and Cal-Ban 3000; Respondents market the weight loss product Cal-Ban 3000 by means of television advertisements and advertisements appearing in publications of general circulation of which Exhibit 1 to the Complaint is typical; and Respondents solicit remittances through the mail to Anderson Pharmacals, P.O. Box 271344, Tampa, Florida 33688-1344 and to Cal-Ban, P.O. Box 150, Tampa, Florida 33601-0150. Respondents deny that their advertising could be summarized as alleged in paragraph 8 of the Complaint or that the representations made in their advertisements are materially false.
Respondents further deny in their Answer that Carl Anderson is active in the conduct of Respondents' business and that Ronald Anderson is a director of Health Care Products, Inc. Respondents asserted as affirmative defenses that the sale of Cal-Ban 3000 is not harmful to the public, that the harm to Respondents by granting the relief sought will be far greater than the harm to the public and that 39 U.S.C. § 3005 and 3007 are unconstitutional. At a hearing before an Administrative Law Judge, Complainant presented the testimony of two witnesses: Postal Inspector James A. Lowe, who testified as to his investigation of Respondents, and William R. Ayers, M.D., who testified as an expert in the areas of weight reduction, weight control and obesity. Respondents presented the testimony of Jaakko Tuomilehto, M.D. and Ph.D., who testified as an expert on weight reduction, weight control, obesity, and guar gum; Jack Hagenauer, Ph.D., who testified as an expert on nutrition; Anthony R. Leeds, M.D., who testified as an expert on nutrition and weight control; Linda M. Maddox, Ph.D., who testified as an expert on advertising interpretation; and Alban Comeau, M.D., who testified about his limited observations of the use of Respondents' product.
Following the hearing and after the parties filed proposed findings of fact and conclusions of law, the Administrative Law Judge issued an Initial Decision in which he found that Respondents make the representations alleged in paragraph 8 of the Complaint; that the representations are materially false; and that Respondents, including Carl Anderson and Ronald Anderson, are engaged in a scheme to obtain money through the mail by means of materially false representations in violation of 39 U.S.C. § 3005. The Administrative Law Judge accordingly recommended the issuance of a Cease and Desist Order and False Representation Order as authorized by § 3005.
RESPONDENTS' EXCEPTIONS TO THE INITIAL DECISION
Respondents have filed 49 separate exceptions as well as a brief divided into several legal arguments. Each exception and legal argument has been considered fully. The exceptions and arguments have been consolidated for discussion and resolution purposes to the extent possible.
EXCEPTIONS 1, 4, 7, 10, 12, 14, 16, 23,
30, 32, 33, 34, 37, 38, 39, 42 and 43
By Exception 1 Respondents take issue with Finding of Fact No. 2 of the Initial Decision which describes Respondent Barbara W. Larkins as owner of Health Care Products, Inc. rather than as an owner. According to Respondents this error while minor, "protends [sic] more significant errors in the more complex scientific findings" (Resp. Exceptions to I.D. at 6). In connection with the remainder of these exceptions Respondents contend that the Initial Decision is "incomplete and misleading" or contains "erroneous omission[s]" since the Administrative Law Judge did not make certain findings of fact proposed by Respondents. Respondents are correct that Respondent Larkins is "an" owner rather than "the" owner of Health Care Products, Inc. Respondents are also correct that this is an insignificant error (Stip. para 8). While other errors have been found and are discussed later in this decision, they do not portend of more significant errors in the scientific findings and only the error relating to one address affects the result reached.
Respondents also correctly point out that the Administrative Law Judge did not adopt all of their proposed findings of fact or conclusions of law. However, the Administrative Law Judge stated in the Initial Decision that all proposed findings of fact, conclusions of law and written arguments were fully considered and, to the extent indicated, were adopted while others were rejected as irrelevant or contrary to the evidence (I.D. p. 3). Respondents' disagreement with the Administrative Law Judge's failure to adopt certain of their proposed findings does not alone constitute error. The Administrative Law Judge's findings of fact and conclusions of law have been reviewed and, except as otherwise stated in this Decision, found to be accurate, complete, and supported by the evidence of record and relevant caselaw. Accordingly, no reversible error is found with respect to these exceptions.
EXCEPTIONS 2 and 3
These exceptions pertain to Finding of Fact Nos. 5 & 7 which describe Respondents' advertisements and discuss the addresses to which remittances are sought. In Exception 2, which addresses Finding of Fact No. 5, Respondents state that the record contains a copy of only one of their advertisements, and that "[t]here is no evidence as to the content of any such other advertisement." In Exception 3, as well as section II of their brief, Respondents take issue with the Administrative Law Judge's Finding of Fact No. 7 that they use P.O. Box 271266, Tampa, Florida 33688-1266 to receive remittances in response to their advertisements for Cal-Ban 3000.
There is no merit to Respondents' Exception 2. Finding of Fact No. 5 does not refer to the contents of an advertisement other than the one in the record. However, as pointed out in the finding and as Respondents have agreed in their Answer to the Complaint (Ans. paras. 6 & 7), Respondents market their product by means of television and publication advertisements and the advertisement in evidence is typical of those recently employed.
Respondents' Exception 3 is well taken. Respondents contend there is no evidence in the record to support Finding of Fact No. 7 and, therefore, P.O. Box 271266 should not be included as an address subject to the terms of a false representation order. The Initial Decision does not include a citation to the record to support the conclusion that P.O. Box 271266 is used to receive remittances, credit card information or orders for Cal-Ban 3000. Moreover, no support for this finding has been found in the record. Accordingly, Respondents' Exception 3 to Finding of Fact No. 7 is granted and P.O. Box 271266 will not be included as an address subject to the false representation order issued with this Decision.
In connection with this exception, Respondents argue that the Administrative Law Judge erred in omitting proposed findings pertaining to discovery and their Jencks Act, 18 U.S.C. § 3500, (1982), requests. In addition, in section IV of their brief, Respondents maintain that dismissal of the Complaint is required since they were denied procedural due process. In this regard Respondents contend that: (a) they were entitled to take Dr. Ayers' deposition; (b) under the Jencks Act, they were entitled to receive, before cross-examination, all prior statements of Dr. Ayers regarding guar gum; and (c) the prohibition in 39 C.F.R. $S952.18(f) against the use of lay testimonials violates their Fifth Amendment right to due process.
Respondents' contentions are without merit. The failure of the Administrative Law Judge to adopt all of Respondents' proposed findings of fact has already been discussed. Further, Respondents were not denied due process and no grounds exist for the dismissal of the Complaint. With regard to discovery, the Initial Decision comprehensively and accurately describes Respondents' discovery requests and the Administrative Law Judge's rulings. As the Initial Decision points out, Respondent's motion to take discovery depositions of Complainant's witnesses was denied because the Rules of Practice do not provide for discovery depositions and Respondents had not shown good cause for the taking of such depositions. Further, as the Administrative Law Judge states, discovery properly could have been denied on the grounds that it was not timely requested (I.D. pp. 3-5).
Respondents' Jencks Act request, although also untimely filed, was granted in part and, either at the beginning of the hearing or prior to cross-examination of Dr. Ayers, Respondents were furnished all of the requested documents which were reasonably available. Furthermore, it appears from the record that an additional document was furnished to Respondents either at the end of Dr. Ayers' "Further Direct Examination" or prior to the close of the hearing. Respondents did not elect to cross-examine Dr. Ayers with respect to this additional document or have him recalled for further cross-examination.
The record does not indicate that there were any other documents relating to Dr. Ayers' testimony which were not produced by Complainant. Moreover, the Administrative Law Judge's rulings with regard to Respondents' discovery request were proper under the circumstances.
Respondents' argument that it has been denied due process 1/ because of the prohibition in 39 C.F.R. § 952.18(f) against the use of lay testimonials is also without merit. Respondents have cited no authority to support their due process argument. Lay testimonials concerning the efficacy of a product are not considered in proceedings under 39 U.S.C. § 3005 because they are so subjective in nature that they have no probative value when compared with available scientific evidence. See United States v. 50 3/4 Dozen Bottles, Etc., 54 F. Supp. 759, 762 (W.D. Mo. 1944); Nutrition Headquarters, Inc., P.S. Docket No. 12/156 at 11 (P.S.D. Aug. 5, 1983); Carl Brandenfels, H.E. Docket No. 1/338 at 4-5 (P.O.D Oct. 5, 1959); Lady Ample, Inc., P.O.D. Docket No. 1/37 at 4 (P.O.D. Dec. 9, 1958). Since there is a valid basis for the rule and other means to prove efficacy, there is no violation of Respondents' constitutional rights.
EXCEPTIONS 6, 8 and 48
In these exceptions, as well as in section III of their brief, Respondents contend that the Administrative Law Judge erroneously found Respondent Ronald Anderson to be a vice-president and director of Health Care Products, Inc., and Respondent Carl Anderson to be the manager of Health Care Products, Inc., and active in promoting Cal-Ban 3000. Respondents argue that the findings in this regard are not supported by, or are contrary to, the evidence of record.
These exceptions are not well taken as the findings are supported by the evidence of record. Complainant's Exhibit 3, copies of the articles of incorporation of Health Care Products, Inc., and copies of that firm's annual reports to the State of Florida, establish that Ronald Anderson was vice president and director of Health Care Products, Inc., as of June 24, 1987. In the absence of any rebuttal evidence, these exhibits were sufficient to make a prima facie showing on which the Administrative Law Judge could base his finding. Complainant's Exhibits 4 and 5, copies of post office box applications in the name of Health Care Products, Inc., and Anderson Pharmacals, both signed by Carl Anderson, establish that he was "manager" of Health Care Products, Inc., as of August 1985. The continued use of the box with Carl Anderson's name on it and the absence of rebuttal evidence is sufficient to support the Administrative Law Judge's finding. Accordingly, there is no merit to these exceptions.
EXCEPTIONS 9, 11, 13, and 15
Respondents contend that Findings of Fact Nos. 23-26 pertaining to the qualifications of Dr. Ayers, Dr. Tuomilehto, Dr. Hegenauer and Dr. Leeds are either incomplete, inaccurate, misleading and contrary to the evidence, or simply incomplete and misleading. In support of these contentions Respondents argue that Dr. Ayers' qualifications were over-stated and his alleged areas of deficiency minimized, while the qualifications of Respondents' experts were substantially understated. A similar argument is contained in section V of Respondents' brief.
The Findings of Fact in the Initial Decision have been thoroughly examined, as has the transcript of the witnesses' testimony, including voir dire, and their curricula vitae. While the findings do not encompass every fact contained in the record, they are an accurate and fair reflection of the qualifications of the witnesses. Accordingly, no error is found and the substance of these findings is affirmed.
Respondents contend under these exceptions that Finding of Fact Nos. 27-32 of the Initial Decision are either incomplete, erroneous and misleading, contrary to the evidence, inaccurate or immaterial. These findings set forth in some detail the opinions of Complainant's witness, Dr. Ayers, as to the efficacy of Respondents' product Cal-Ban 3000, and its primary ingredient, "Cyamopsis Tetragonolobus," commonly known as guar gum, for weight reduction when used without diet or exercise. The findings describe the bases for Dr. Ayers' opinions, the evidence on which he relies for his opinions, synopses of medical studies on which Dr. Ayers bases his opinions and his critique of Respondents' evidence, including the medical studies on which Respondents rely. Dr. Ayers' testimony, the evidence he relied on and his critique of Respondents' evidence have all been carefully examined. The Administrative Law Judge's findings fairly and accurately reflect the substance of such testimony. While Respondents may disagree with Dr. Ayers' testimony, the description of the testimony is accurately summarized in the Administrative Law Judge's Findings of Fact and no error is found. Accordingly, Respondents' exceptions are without merit.
EXCEPTIONS 24-29 and 31
Respondents contend that Finding of Fact Nos. 34, 35, 39, 43, 44 and 48 of the Initial Decision are either misleading, inaccurate and/or incomplete. The findings synopsize the testimony and opinions of Respondents' three expert witnesses, Dr. Tuomilehto, Dr. Leeds and Dr. Hegenauer. The findings also describe in some detail the contents of the medical studies on which these witnesses relied in formulating their opinions.
Respondents' objections, their references to the record, the complete testimony of each witness, and the medical data relied on by each witness has been carefully considered. The challenged findings accurately set forth the substance of the testimony of each witness and the contents of the exhibits. The findings are not all inclusive, as they cannot be, considering the length of the transcript and the number of medical studies and other exhibits contained in the record. However, contrary to Respondents' assertions, there are no material omissions and the findings are not misleading. Accordingly, it is concluded that there is no merit to these exceptions.
EXCEPTIONS 35, 36, 40, 41
Respondents contend that Finding of Fact Nos. 9-12 of the Initial Decision either reflect a misunderstanding of the evidence or are irrelevant, incomplete, misleading or contrary to the evidence. Findings of Fact Nos. 9-11 synopsize the direct and cross-examination of Respondents' expert, Dr. Maddox. In Finding of Fact No. 12 the Administrative Law Judge rejects Dr. Maddox's opinions and finds that Respondents' advertisement makes the representations alleged in paragraph 8 of the Complaint. In exception 35 Respondents object to the characterization of Dr. Maddox's testimony in Finding of Fact No. 9 as being confined by counsel on direct examination to two areas of Respondents' advertisement. The areas referred to were the headline phrase "WITHOUT DIETING" in large bold print at the top of the advertisement and the phrases "GUARANTEED 100%" in large print at the top right hand corner of the advertisement, "unconditional 100% money back Guarantee" in the bottom left corner, and "We guarantee it]" in small print in the text near the top of the advertisement.
Contrary to Respondents' assertion the Administrative Law Judge accurately described Dr. Maddox's testimony as being confined to these areas of the advertisement on direct examination. During her brief direct testimony the witness was questioned by counsel only on the "WITHOUT DIETING" and guarantee portions of the advertisement. Thus, no basis exists for taking exception to the Administrative Law Judge's finding in this regard. In Finding of Fact Nos. 10 and 11 the Administrative Law Judge described Dr. Maddox's testimony on cross-examination. The Administrative Law Judge noted that Dr. Maddox considered the guarantee language of the advertisement, the large headline, an illustration of a young lady and the word "FREE" at the bottom of the advertisement as the portions of the advertisement most likely to be read by the average reader; that she qualified her answers to questions on other portions of the advertisement; that she attached no importance to other portions of the advertisement as she appeared reluctant to go beyond the limit of her original direct testimony; and that in her opinion the average consumer would probably not read other portions of the advertisement. Exceptions 36 and 40 appear to focus more on the style used by the Administrative Law Judge in describing Dr. Maddox's testimony, than on the contents of the synopsis itself, although vigorous exception is taken to that aspect of the finding which states that the witness qualified her answers. For instance, in Exception 36 Respondents' state "IDFF 10 reads more like argument than factual finding," and "the last sentence is . . . argumentative." In Exception 40 Respondents state "[t]he Finding is a somewhat quarrelsome rendition of Dr. Maddox's testimony."
Dr. Maddox's testimony has been carefully and completely reviewed and analyzed. While in one instance the Administrative Law Judge might have exaggerated the position taken by the witness 2/ , Finding of Fact Nos. 10 and 11 otherwise accurately, comprehensively, and objectively set forth the substance of her testimony. Thus, no prejudice has been found.
While the Administrative Law Judge's reasons for rejecting Dr. Maddox's expert opinion are not stated in Finding of Fact No. 12, they are discussed in the Discussion and Conclusions of Law portion of the Initial Decision (I.D. pp. 30 & 31, COL 2). The evaluation of the testimony is considered and well reasoned and is consistent with a reasonable and ordinary reading of Respondents' advertisement.
It is well established that Administrative Law Judges and the Judicial Officer may, without the assistance of lay or expert testimony, determine whether the representations are made, their effect on the ordinary mind, and their materiality. Vibra Brush Corp. v. Schaffer, 152 F. Supp. 461, 468 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2d Cir. 1958); National Gold Mint, P.S. Docket No. 22/165, (P.S.D. May 1, 1987); Robertson-Taylor Co., P.S. Docket Nos. 16/98-102, 16/120-121 (P.S.D. March 31, 1986). The impression of advertising on the ordinary mind may be determined by the trier of fact solely on the basis of the advertising itself. American Mint, P.S. Docket No. 23/110 (P.S.D. June 16, 1987); Associated Telephone Directory Publishers, Inc., P.S. Docket No. 13/191 (P.S.D. Jan. 25, 1984). Such was the case here. Accordingly, there is no merit to Respondents' exceptions.
EXCEPTIONS 44 - 46
Respondents contend in connection with these exceptions, as well as in sections VI and VII of their Brief, that the Administrative Law Judge misapplied the law in Conclusion of Law Nos. 1, 2 and 4 of the Initial Decision. Conclusion of Law No. 1 is a correct general statement with appropriate supporting citations of the ordinary reader standard for interpreting advertisements. In Conclusion of Law No. 2 the Administrative Law Judge applied the standards to Respondents' advertising and properly concluded that Respondents' advertisement makes the representations alleged in paragraph 8 of the Complaint. Conclusion of Law No. 4 correctly states the general principle with appropriate case citation, that a promise of a refund does not dispel the effect of a false representation.
While Respondents do not disagree with the principle stated in Conclusion of Law No. 1, they argue that persons of ordinary mind for purposes of interpreting their advertisement are obese persons to whom the advertisement is directed. They further argue that the promise of a refund would dispel the effect of the representation of weight loss to the ordinary overweight reader. It is true, as Respondents argue, that the ordinary reader is generally the person to whom the advertisement is directed. Scott David Wilcox, P.S. Docket No. 23/70 at 5 (P.S.D. June 29, 1987), recon. denied (P.S.D. Aug. 24, 1988); Mid-Am Marketing, Inc., P.S. Docket No. 24/12 at 6 (Jan. 5, 1987). In this proceeding, the ordinary reader to whom the advertisement is directed includes not only obese persons, but any person desiring to lose weight. Nonetheless, there is no merit to Respondents' argument that contrary to Conclusion of Law No. 4, the promise of a refund by Respondent would dispel the effect of the representation of weight loss to the ordinary reader desiring to lose weight. Respondents attempt to distinguish Farley v. Heininger, 105 F.2d 79 (D.C. Cir. 1939), cert. denied, 308 U.S. 587 and Borg-Johnson Electronics, Inc. v. Christenberry, 169 F. Supp. 746 (S.D.N.Y. 1959) which are cited as the basis for Conclusion of Law No. 4, is not persuasive. The ordinary reader desiring to lose weight would be no more likely to read the advertisement as urged by Respondents than any other reader. The principle of Farley and Borg-Johnson is sound and properly applicable to the facts of this case.
Respondents next contend that the Administrative Law Judge erred first in rejecting Dr. Maddox's expert testimony as to the interpretation of the advertisement in issue, and second in relying on Vibra Brush Corp. v. Shaffer, 152 F. Supp 461 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2d Cir. 1958), to form his own interpretation of the representations made. Respondents maintain that Vibra Brush is either outdated, inapplicable or distinguishable.
Contrary to Respondents' contention, Vibra Brush has been cited and followed in numerous Postal Service Decisions and is neither outdated, inapplicable nor distinguishable. Great Lakes Yellow Pages, Inc., P.S. Docket No. 25/79 at 5 (P.S.D. July 15, 1988); see also, CM/NA, P.S. Docket No. 20/33 at 10 (P.S.D. Aug. 29, 1986). The Court in Vibra Brush clearly held that the meaning of an advertisement aimed at the ordinary consumer was a matter for the finder of fact "who clearly was in the position without assistance of expert testimony to make his finding." The Court further stated "an expert's view . . . is of little help to an examiner who is called upon to decide from the advertisement as a whole [its] . . . impression . . . upon the general population . . . ." Vibra Brush, 152 F. Supp. at 468. Following the Vibra Brush principle, the Administrative Law Judge properly weighed Dr. Maddox's opinions as to the meaning of the advertisement and reached the conclusion that Respondents make the representations alleged in paragraph 8 of the Complaint. Delta Enterprises, P.S. Docket Nos. 14/72 - 75 at 9 (July 3, 1984); Fort Morgan Vapor Jet, P.S. Docket No. 12/64 at 8 (P.S.D. Sept. 29, 1982).
Respondents' final argument in connection with these exceptions is that the pre-1968 cases cited by the Administrative Law Judge in Conclusion of Law No. 1 are inapplicable because the predecessor statute, 39 U.S.C. § 4005, was amended in 1968, changing the statute from one dealing primarily with fraud to one addressing only false representations. Respondents correctly point out that the concepts of fraud and false representation are not the same. However, Respondents have cited no case in support of their proposition that pre-1968 decisions are inapplicable to post-1968 proceedings, nor have any such cases been found. While the statutory change eliminated the need to prove intent to deceive, the remaining concepts relating to the falsity of representations have not changed and the cases dealing with this issue are equally applicable to the present statutory provision, 39 U.S.C. § 3005. Respondents' position that the pre-1968 cases are no longer applicable as precedent for issues presented by the present statutory language is therefore rejected. The Administrative Law Judge properly relied on such cases in arriving at his decision.
EXCEPTIONS 47 and 49
In connection with these exceptions, and in section VI, VIII and IX of its Brief, Respondents contend that the Administrative Law Judge misapplied the law in Conclusion of Law Nos. 5 and 8 and that these conclusions are contrary to the evidence, or violate the First Amendment of the Constitution. In Conclusion of Law No. 5 the Administrative Law Judge held that Complainant had established by a preponderance of the reliable and probative evidence that Respondents' claims for their product have not been accepted by the medical or scientific community. The Administrative Law Judge therefore concluded that Complainant had made a prima facie showing of the falsity of those claims. The Administrative Law Judge further concluded that Respondents failed to sustain the burden of rebutting the prima facie case of falsity. In Conclusion of Law No. 8 the Administrative Law Judge found that Respondents were engaged in the conduct of a scheme for obtaining money through the mail by means of materially false representations in violation of 39 U.S.C. § 3005. Respondents contend that these conclusions of law reflect that the Administrative Law Judge improperly shifted the burden of persuasion from Complainant to Respondents. They argue that the Administrative Law Judge erred by requiring Respondents to prove the truth of their claims, rather than by requiring Complainant to prove the falsity of the claims.
The Administrative Law Judge extensively discussed the falsity issues and analyzed the expert testimony and exhibits (I.D. at 31-35) which serve as the basis for his conclusions of law. Specifically, he found that the testimony of Respondents' experts offset the testimony of Complainant's expert as to the existence of a consensus of informed medical opinion with respect to the efficacy of guar gum alone to cause weight loss. Nonetheless, he concluded that a preponderance of the evidence supports Dr. Ayers' view that the medical evidence does not establish that ingestion of guar gum will assure weight loss without dieting or exercise. A review of the record supports the conclusion that the use of guar gum without diet or exercise will not cause significant weight loss. While the Administrative Law Judge found that the evidence does not establish that this conclusion is supported by a consensus of informed medical opinion, I find otherwise. 3/ Dr. Ayers testified and I am persuaded that a consensus of informed medical opinion is that while guar gum may be an important adjunct to diet and the treatment of obesity, it will not, by itself, cause significant weight loss (I.D., FOF 32).
Respondents' experts, Drs. Tuomilehto, Hegenauer and Leeds also possess impressive credentials (I.D. pp. 14-17). However, only Dr. Hegenauer stated that there is clear evidence that guar gum, alone, will cause significant weight loss (I.D. p. 34). As the Administrative Law Judge pointed out, Drs. Tuomilehto and Leeds were more guarded in their opinions (I.D. p. 34). Moreover, the opinions of Respondents' experts were weakened by the inconsistent or inconclusive medical studies on which they relied in formulating their opinions. The Initial Decision accurately describes these studies and the witnesses' interpretation of them (I.D. pp. 33-35). The Administrative Law Judge was not persuaded by the testimony of these witnesses and a review of the record does not establish that the Administrative Law Judge erred in this regard. Since the Administrative Law Judge concluded that Complainant had proved its case by a preponderance of the evidence and on appeal this conclusion is affirmed, there is no basis for asserting that the burden of persuasion was improperly shifted to Respondents. Accordingly, it is concluded that Conclusion of Law Nos. 5 and 8, as modified by the finding in this Decision on the consensus of informed medical opinion, are supported by the record. Respondents next contend that under the First Amendment the Judicial Officer "must assure that Complainant's evidence clearly proves the falsity of Respondents' representations." According to Respondents "[a]nything less would infringe Respondents' First Amendment privileges." The record has been fully considered and analyzed. Complainant has proved the falsity of Respondents' representations by a preponderance of the reliable and probative evidence. False commercial advertising, such as employed by Respondents, is not protected by the First Amendment. Virginia State Bd. of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771-72 (1976); Konigsberg v. State Bar, 366 U.S. 36, 49 (1961); United States Postal Service v. Athena Products, Ltd., 654 F.2d 362, 366-67 (5th Cir. 1981) cert. denied 456 U.S. 915 (1982). Therefore, Respondents' exceptions are without merit.
After consideration of the entire record it is concluded that Respondents are engaged in a scheme to obtain money through the mail by means of materially false representations. Accordingly, Respondents' appeal is denied. The orders authorized by 39 U.S.C. § 3005 are issued with this decision.
1/ Respondents argue that the Judicial Officer has authority to decide constitutional questions and that a contrary ruling in Columbia Flier, P.S. Docket No. 26/17 (P.S.D. May 11, 1988) is in error. The ruling in Columbia Flier is not in error and is reaffirmed. However, the issue in this proceeding is the constitutionality of a Rule of Procedure promulgated by the Judicial Officer. That issue is subject to Judicial Officer review and determination. Furthermore, the record establishes that Respondents were not prejudiced by the prohibition of the use of lay testimonials. Counsel for Respondents stated that there was no need to present such testimony from the one individual present at the hearing who could have provided it, since the evidence was presented through the testimony of Respondents' witness, Dr. Comeau.
2/ In Finding of Fact No. 10, the Administrative Law Judge's use of the word "refused" in connection with Dr. Maddox's testimony appears to be an overstatement of the witnesses conduct. In Finding of Fact No. 12 the Administrative Law Judge rejected as unrealistic Dr. Maddox's opinion that the average consumer would merely "skim read" the advertisement, noting only the headline, illustration, the word "FREE" and the references to a guarantee. He found that the ordinary reader interested in losing weight would read most of the advertisement and most certainly those portions of the advertisement which he found make the representations alleged in paragraph 8 of the Complaint. In Exception 41 Respondents contend that there is no evidence on which the Administrative Law Judge may reject Dr. Maddox's testimony and none upon which he may make findings as to the representations contained in the advertisement. A similar argument is made in Exceptions 44-46, discussed separately, infra.
3/ An agency reviewing an Administrative Law Judge's decision under the Administrative Procedure Act is authorized to decide all issues de novo. See, Containerfreight Transp. Co. v. ICC, 651 F.2d 668, 670 (9th Cir. 1981); Hamlin Testing Laboratories, Inc. v. AEC, 357 F.2d 632, 637 (6th Cir. 1966); Great Lakes Yellow Pages, Inc., P.S. Docket No. 25/79 at 5 n. 3 (P.S.D. July 15, 1988) citing FCC v. Allentown Broadcasting Corp., 349 U.S. 358 (1955). This conclusion is based on a reading of the testimony of all of the witnesses and the supporting exhibits. Despite Respondents' contrary view, Dr. Ayers was well qualified to testify as an expert on weight reduction and obesity and his testimony was persuasive. Dr. Ayers unqualifiedly provided an opinion on the efficacy of the use of guar gum, alone, as a significant weight reduction means. His belief, based on and supported by the evidence of record, is that guar gum alone will not cause significant weight loss. According to Dr. Ayers' testimony which is persuasive, in order for an obese person to lose weight he or she must establish a negative energy balance either through ingestion of fewer calories or by exercise, or both (Comp. Exh. 2; Tr. 68-69).