In the Matter of the Complaint Against VITATONE HEALTH PRODUCTS, and THORNTON COMPANY, at New York, New York. H.E. Docket No. 5/164; 03/06/59 Ablard, Charles D. POST OFFICE DEPARTMENT Washington 25, D.C.
A complaint was issued in this proceeding on September 17, 1957, charging that the respondent was obtaining remittances of money through the mails for Vitatone Formula by means of false and fraudulent pretenses. Vitatone is advertised as a dietary supplement for the treatment of underweight persons. An answer was filed by the respondent on October 24, 1957, denying the essential allegations of the complaint. The date set for the hearing was extended several times because of negotiations by the parties with a view towards compromise. On December 6, 1957, the respondent executed an Affidavit of Agreement in which he agreed to discontinue certain advertising representations.
The affidavit provides:
"It is further agreed that if the Post Office Department receives evidence showing a resumption of the enterprise complained against in this proceeding in violation of 39 U.S. Code 259 and 732 or this affidavit the Assistant General Counsel, Fraud Division, Post Office Department, may forthwith direct the postmaster at the office of address to impound mail directed to the name so being employed and may request a hearing within 10 days to determine whether the Respondent named in such notice is violating said law or the affidavit, and that in the event of an affirmative determination of that issue, a fraud order may issue forthwith against such name or names employed by affiant ..." (Emphasis supplied)
The complainant accepted the affidavit and moved for a suspension of the proceeding. On December 6, 1957, the Hearing Examiner ordered it indefinitely suspended. On January 19, 1959, the complainant moved for a hearing alleging a violation of the affidavit. On January 28, 1959, the complainant moved to amend the complaint to eliminate the name "Thornton Products" from it.
The examiner ordered the complaint amended on January 29, 1959. On February 4, 1959, an answer denying the allegations in the motion for a hearing and a cross-motion to dismiss was filed by the respondent. In the cross-motion the respondent stated that he would not appear at the hearing scheduled on the next day. He denied the allegations of the complainant and contended that the hearing was illegal because of the decision in Borg-Johnson Electronics v. Christenberry, (U.S.D.C., S.D.N.Y., decided January 19, 1959.) On February 5 an ex parte hearing was held. A postal inspector testified concerning use of he mails and a medical witness for the complainant was available for testimony. The Hearing Examiner refused to rule on the motion to dismiss stating that it was not timely filed. Upon motion of the complainant, the examiner found that the respondent was in default pursuant to Rule 201.9 of the Rules of Practice (23 F.R. 2794) and the record was transmitted to the Judicial Officer for a Departmental Decision.
On February 10 the respondent gave notice of intention to appeal from the ruling of the examiner placing the matter in default stating that a complete Memorandum of Law on procedural matters was in preparation and would be filed within a few days. This Memorandum was filed on February 20, 1959. It raises certain procedural questions which are not necessary to consider in view of the ultimate holding of this decision.
The pertinent portion of the affidavit of the respondent upon which the complainant bases his case states:
"That affiant herein, on behalf of the respondent enterprise aforesaid, will forthwith discontinue and desist from soliciting remittances of money through the mails for the preparation called 'Vitatone Formula' or for any other preparation of similar composition by whatever name or names, upon the following representations or advertising claims: (emphasis supplied)
.....
2. That by the use of Vitatone Formula, you may 'gain 10 to 50 pounds of firm, solid flesh';
3. That Vitatone 'makes you hungry, aids digestion, builds red blood, gives quick strength';
4. That Vitatone helps you to 'Start putting weight on the very first day';"
At the hearing the complainant contended that a fraud order should issue for two reasons; firstly, the respondent failed to appear at the hearing and was therefore in default and an order could be issued pursuant to the Rules of Practice, or; secondly,
the affidavit had been breached and a fraud order should issue because of that breach.
As to the first contention the affidavit permits the Assistant General Counsel to request a hearing to determine whether the respondent is violating "the law or the affidavit" and "in the event of an affirmative determination of that (sic) issue a fraud order may issue forthwith." From this affidavit it is impossible to determine whether it is the law, which would require proof of fraudulent intent, or the affidavit which must be violated before an order will issue. However, it is clear that it is only upon an affirmative finding on one of those issues that a fraud order may issue. While an order might be issued for a default based upon failure to appear for a hearing, the complaint and the exhibits must show on their face a violation of the statute.
This reaches the second contention of the complainant. Assuming that it is the breach of the affidavit that is material, the representations which the respondent promises not to make are those which are quoted in paragraphs 2, 3 and 4 of the affidavit. While an argument can be made that the advertisements introduced into evidence at the ex part hearing (Department Exhibits A and B) make substantially these same representations, the fact remains that the words quoted in those paragraphs of the affidavit do not appear in those advertisements. The obvious reason for putting the quoted language in the affidavit was that it appeared in prior advertising. In fact it appeared in bold print. The language does not appear in the current advertising and a literal interpretation of the affidavit precludes the issuance of an order.
I conclude that a fraud order should not issue. This proceeding is dismissed without prejudice.