June 27, 1990
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 33601-0150
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, Law Department, United
States Postal Service, Washington, DC 20260-1144
APPEARANCE FOR RESPONDENTS: Marion E. Harrison, Esq., 840 The
Watergate, 2600 Virginia Avenue, N.W., Washington, DC 20037-1905
POSTAL SERVICE DECISION ON MOTION FOR RECONSIDERATION
Respondents have requested reconsideration of the Postal Service Decision issued in this proceeding which holds that Respondents are engaged in a scheme or device for obtaining money through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.
The General Counsel of the United States Postal Service (Complainant) initiated this proceeding by filing a Complaint, which as subsequently amended, alleged that Respondents falsely represent that the use of the product Cal-Ban 3000 will cause significant weight loss without diet or exercise.n1 Following a hearing and the submission of proposed findings of fact and conclusions of law, the assigned Administrative Law Judge issued an Initial Decision in which he concluded that Respondents' advertisement makes the representations alleged in the Complaint and that those representations are materially false (I.D. p. 36).
n1 The specific allegations of the amended Complaint are set forth at pages 2-3 of the Postal Service Decision.
Respondents filed a timely appeal from the Initial Decision in which they presented forty-nine (49) separate exceptions with accompanying legal arguments. After review of the entire record and consideration of Respondents' exceptions and legal arguments, the Postal Service Decision was issued which, although finding
some merit to certain of Respondents' exceptions, affirmed the Initial Decision. A Cease and Desist Order and a False Representation Order were issued with the Postal Service Decision. Respondents filed a timely Motion for Reconsideration in which they alleged that the Postal Service Decision is in error insofar as it affirms the Initial Decision. Complainant has filed a reply in opposition to the Motion for Reconsideration.
On reconsideration, Respondents criticize the form as well as the substance of the Postal Service Decision in much the same manner as they attacked the Initial Decision. While Respondents state that they have limited their focus on reconsideration to the "several errors which they perceive to be the more egregious," a review of their arguments on reconsideration, as well as their original exceptions on appeal, does not establish that any error of any sort has been committed.
Respondents throughout their motion complain that their proposed findings of fact were not adopted, that the findings made were incomplete and that the Initial Decision and Postal Service Decision do not provide sufficient analysis to support the conclusions reached. Respondents' proposed findings of fact were considered, but for the most part were not adopted because they were irrelevant or contrary to the evidence (see I.D. p. 3; P.S.D. pp. 5, 7-8). The findings made in the Initial Decision as modified or supplemented in the Postal Service Decision are supported by a preponderance of the reliable and probative evidence in the record and properly serve as the basis for concluding that Respondents are engaged in a scheme or device for obtaining money through the mail by means of materially false representations. Respondents' assertions of lack of analysis n2 are simply their expression of displeasure with the conclusions reached which do not permit the continued misrepresentation of their product.
n2. Respondents also argue that the Postal Service Decision fails to cite to the record. For the most part, the Postal Service Decision relies on the findings and conclusions of the Initial Decision. Thus, the citations in the Initial Decision to a great extent serve as the basis for the findings and conclusions in the Postal Service Decision.
The principal issues to be decided in this § 3005 proceeding are whether the representations alleged in the Complaint are made in Respondents' advertisement and whether those representations are materially false. These issues as well as the other issues raised on reconsideration are discussed hereafter.
The representations alleged in the Complaint were found to be made based on a review of Respondents' advertisement and the effect it would have on ordinary readers.n3 Respondents' advertisement is the most persuasive evidence of the representations made. The Administrative Law Judges and the Judicial Officer, as the finders of fact, may, without the assistance of lay or expert testimony, determine from the advertisement itself whether the representations are made, their effect on the ordinary mind, and their materiality (P.S.D. pp. 15 - 16).
n3 In the Postal Service Decision the ordinary reader was stated to be not only obese persons, but any others desiring to lose weight (P.S.D. p. 17). Respondents seem to take issue with this conclusion but have not shown that it is error or, even if in error, that it would affect the outcome of this proceeding.
Although expert testimony is not required, it is admissible and may be relied upon by the finder of fact. The testimony of Respondents' expert was admitted in this proceeding and properly evaluated in light of the language used in Respondents' advertisement. To some extent the testimony of Respondents' expert supports the conclusions reached in the Initial Decision and Postal Service Decision (see I.D. p. 31; Tr. pp. 518, 605-06, 608-09, 611-13). However, the expert's view of the effect of the "guarantee" language coupled with other portions of the advertisement which tout the benefits of the product, is not consistent with the overall import of the language used.
Respondents contend that it was somehow improper to rely on Vibra-Bruch Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957) rev'd on other grounds, 256 F.2d 681 (2d Cir. 1958) and prior Postal Service Decisions to establish that the Administrative Law Judges and the Judicial Officer may find the existence and effect of representations from the advertisement itself without the assistance of lay or expert testimony. According to Respondents, Vibra-Brush is inapplicable and the prior administrative decisions apparently have no precedential value.
Neither position is correct. Vibra-Brush, supra, n4 clearly holds that the trier of fact may determine from the advertisement itself the effect it would have on ordinary readers. In this regard the Court stated:
"The question at issue was the impression which the advertisement, taken as whole, made upon the average man. This was a matter for the trier of the facts who clearly was in the position, without assistance of expert testimony, to make his finding. The hearing examiner in rejecting the proferred evidence stated he needed no aid in interpreting the advertisement. There was no error in refusing to receive the testimony of the so-called experts. An expert's view of what he deems to be the psychological impact of the contents of an advertisement upon the reader, while it may be of help to those of the advertising world who write copy and advise the advertiser of a potential effective sales appeal, is of little help to an examiner who is called upon to decide from the advertisement as a whole the impression it is likely to make upon the general population--the proverbial man in the street. Donaldson v. Read Magazine, 333 U.S. 178, 68 S.Ct. 591, 92 L.Ed. 628." Vibra-Brush, supra, at p. 468.
The prior Postal Service Decisions were properly cited for the same proposition. These Decisions contain recent expressions of the longstanding, uniform and continuous administrative interpretation of the § 3005 requirement for evidence satisfactory to the Postal Service n5 regarding the existence and effect of advertising representations.
n4 Respondents also appear to criticize the Postal Service Decision for relying on Vibra-Brush, supra, because the case is over thirty years old. The age of the decision does not affect its precedential value. Respondents' arguments regarding the effect of the 1968 Amendment to the Postal False Representation statute are discussed infra.
n5 39 U.S.C. § 3005 requires "evidence satisfactory to the Postal Service" to support a statutory violation. A preponderance of the evidence has been held to satisfy this requirement. See Contemporary Mission, Inc., P.S. Docket No. 8/159 (P.S.D. June 30, 1981).
Accordingly, Respondents have failed to show on reconsideration that the standards applied were incorrect or that the Postal Service Decision erred in affirming that portion of the Initial Decision which found that Respondents' advertisement makes the representations alleged in the Complaint.
II. Falsity Issues
Respondents have also failed to show on reconsideration that the Initial Decision and Postal Service Decision incorrectly concluded that the representations made in Respondents' advertising are materially false. In both the Initial Decision and Postal Service Decision it was concluded that although guar gum (the ingredient in Cal-Ban 3000 which is alleged to cause weight loss) may be an important adjunct to diet and the treatment of obesity, it will not by itself cause significant weight loss. While the Administrative Law Judge found otherwise, the Judicial Officer found in the Postal Service Decision that this conclusion was supported by a consensus of informed medical opinion. Respondents contend that these findings are erroneous because improper weight was accorded the testimony of their witnesses, particularly Dr. Hegenauer, and Complainant's witness Dr. Ayers, the finding regarding a consensus of informed medical opinion is not supported by the record and proper consideration was not given to the nature, properties and physiology of guar gum.
Respondents' arguments regarding the weight of the evidence n6 and the existence of a consensus of informed medical opinion reflects a misunderstanding of the Postal Service Decision. As stated in the Postal Service Decision, the conclusions with respect to the efficacy of the product and the consensus of informed medical opinion were "based on a reading of the testimony of all of the witnesses and the supporting exhibits." (P.S.D. p. 21, emphasis added). The pertinent portions of the testimony and exhibits relied on were summarized and analyzed in the Initial Decision and cited in the Postal Service Decision (see P.S.D. pp. 21-22 referring to I.D. p. 35).
n6 While the conclusions reached in the Postal Service Decision do not turn on the weight accorded the testimony of Complainant's witness Dr. Ayers and Respondents' witnesses, particularly Dr. Hegenauer, it should be pointed out that Respondents' argument that Dr. Ayers is not qualified to testify as an expert in this proceeding and that Dr. Hegenauer is well qualified is incorrect. Dr. Ayers, as a medical doctor on the staff of the Georgetown University Medical School, the Medical Director of the Georgetown University Diet Management Program from 1978-1983, Director of the Clinical Nutrition Course at the Georgetown University School of Medicine from 1985 to present, together with his writings and research, is eminently well qualified to testify in this proceeding (CX 2 & 9; I.D. pp. 13-14). Dr. Hegenauer on the other hand was unable to convince the presiding Administrative Law Judge at the hearing, and the record does not reflect, that his education and experience would be helpful to the issues in this proceeding (see Tr. p. 270; I.D. pp. 15-16). Moreover, his objectivity as an expert must be questioned as he is a representative of Health Care Products (Tr. 406).
The Administrative Law Judge stated in the Initial Decision that the opinions of Respondents' experts offset the opinion of Complainant's expert, Dr. Ayers, with respect to the existence of a consensus of informed medical opinion. He than concluded that a preponderance of the evidence established that Dr. Ayers view that any claims that ingestion of guar gum will assure weight loss without dieting or exercise are not supported by medical evidence. (I.D. p. 32). The latter conclusion in effect finds the existence of a consensus of informed medical opinion despite the Administrative Law Judge's statement to the contrary. As stated in the Initial Decision, Respondents' experts did testify there was no consensus but this testimony was contradicted in part or shown to lack substantiation by their further testimony and the exhibits of record as summarized in the Initial Decision (see I.D. pp. 32-35). The inescapable conclusion thus drawn in the Postal Service Decision was that a consensus does exist and that consensus is that guar gum will not by itself cause significant weight loss even though it may be an important adjunct to diet and the treatment of obesity (P.S.D. pp. 21-22). This conclusion is affirmed on reconsideration.
Respondents argue that their citation to American School of Magnetic Healing v. McAnnulty, 187 US 94 (1902) was improperly ignored. However, the holding of McAnnulty is inapplicable where, as here, it has been determined that a consensus of informed medical opinion does exist.
Respondents criticize both the Initial Decision and the Postal Service Decision for not analyzing the nature, properties and physiology of guar gum. The well accepted uses of guar gum were discussed in the Initial Decision (ID FOF 16), but because of the lack of evidence to show that guar gum alone will cause weight loss, further analysis was considered both by the Administrative Law Judge and the Judicial Officer to be of little value. Respondents' arguments on reconsideration do not establish that any error in this regard was committed.
III. Miscellaneous Issues
Respondents contend that their arguments relating to the 1968 Amendment to § 3005 raised issues of first impression which should have been more fully discussed in the Postal Service Decision. The Postal Service Decision addressed Respondents' arguments and found them to be without merit. The 1968 Amendment only removed the element of intent from the requirements of § 3005 and did "not make any other material changes in the existing law." H.R. Rep. No. 235, reprinted in 1968 U.S. Code, Cong. & Admin. News 4290, 4297; see United States v. International Term Papers, Inc., 477 F.2d 1277, 1280 (lst Cir. 1973); M.K.S. Enterprises, Inc. v. United States Postal Service, 459 F. Supp. 1180, 1183 (E.D.N.Y. 1978); Lynch v. Blount, 330 F. Supp. 689, 692-93 (S.D.N.Y. 1971) aff'd 404 U.S. 1007 (1972). The resulting effect of the 1968 Amendment was to lessen the evidentiary burden on Complainant because it no longer had to prove intent. Nonetheless, Complainant bears the initial burden of going forward and the ultimate burden of persuasion with respect to the existence and falsity of the representations alleged in the Complaint. See Contemporary Mission, Inc., P.S. Docket No. 8/159 (P.S.D. June 30, 1981) and cases cited therein at p. 4. While the burden of going forward did shift to Respondents after Complainant had presented its prima facie case, the ultimate burden of persuasion stayed with Complainant and was satisfied by the testimony and exhibits admitted into evidence.
Respondents' First Amendment argument was addressed in the Postal Service Decision (P.S.D. p. 23) and requires no further discussion on reconsideration. Respondents advertising representations have been found to be false and therefore are not protected speech under the First Amendment. Respondents' arguments regarding the Jencks Act and other discovery issues were also addressed in the Postal Service Decision (P.S.D. pp. 7-9). No error has been shown and no further findings or discussion regarding these issues is warranted.
Finally, Respondents' arguments relating to the inclusion of Carl and Ronald Anderson as parties to this proceeding were addressed in the Postal Service Decision (P.S.D. p. 10) and no error on reconsideration has been shown. No presumptions were applied and the evidence presented in the absence of any rebuttal evidence was sufficient to find that both Andersons were properly joined as parties to this proceeding.
Respondents' arguments on reconsideration have been fully considered and found to be without merit. Accordingly, Respondents' Motion for Reconsideration is denied.