March 25, 1959
In the Matter of the Complaint That
ROJELLE PHARMACAL CO.,
ROJELLE PHARMACAL COMPANY,
MR. P. BRONNER,
PAUL BRONNER, and
PAUL BRONNER, REGISTERED PHARMACIST,
at
Chicago, IL
P.O.D. Docket No. 1/76
(hereinafter called Respondent), is engaged in conducting a scheme for obtaining money through the mails in violation of 39 U.S. Code 259 and 732.
INITIAL DECISION OF HEARING EXAMINER
The General Counsel by his Acting Assistant General Counsel, Richard S. Farr, Fraud and Mailability Division, hereinafter referred to as the Complainant, filed on October 24, 1958, a complaint under the appropriate Rules of Practice charging the Respondent, under the various names given in the caption hereof, with operating an enterprise for the sale of a preparation containing “Royal Jelly” and called “Rojelan Formula 66” through the mails by means of certain false and fraudulent pretenses, representations and promises in violation of 39 U.S. Code 259 and 732 and requests the issuance of a fraud order so as to suppress this alleged fraudulent enterprise.
Answer was duly filed together with authorization of representation by attorney, Charles H. Rowan, Esq., and an application for part of the hearing in Chicago, Illinois, solely for the presentation of the testimony of a certain medical doctor because of the unavailability of this witness to appear at Washington, D.C. Complainant by written opposition filed December 9, 1958, urged denial of this application on the grounds that no valid showing was made why the proposed witness can not appear and testify in Washington, D.C., at a date suitable to him. No opposition was made that the proposed testimony does not appear relevant or material. By order of the undersigned dated December 12, 1958, the application was granted for the reasons therein stated, and the testimony of this witness was presented at the hearing before me in Chicago, Illinois, on January 13, 1959,[1] being the first available date after hearing in this proceeding was held in Washington, D.C., on December 16, 1958.
Denial by the undersigned of a motion made by Respondent at the commencement of the hearing, to dismiss the proceeding because of the separate defense asserted in the answer that the Rules of Practice are invalid since they provide for a final departmental determination by an unauthorized official (Tr. 19, 20), which defense is restated in Respondent’s proposed findings and conclusions (p. 25), is mentioned to state this further reason, namely, that ruling on the merits of this motion is not within the province of the Hearing Examiner since it concerns the legality of the reviewing or appeal authority which clearly does not come within the responsibilities and powers delegated and authorized to the Hearing Examiner. Obviously the merits of this motion are for determination elsewhere.
The completed transcript of the proceeding having been received on January 27, 1959, proposed findings of fact and conclusions of law were, therefore, due from the parties in accordance with Rule 201.27, not later than February 11, 1959. However, for appropriate causes shown by counsel for Respondent the filing of such documents was extended to February 24, 1959, and again to Friday, March 6, 1959. The proposed findings and conclusions with supporting reasons, filed by Complainant consist of 9 pages. Those filed by Respondent consist of 32 pages, four of which are devoted to setting forth 12 specific and basic proposed findings of fact and the remainder as a brief fully covering the entire record and the appropriate citations thereof in support of the proposed findings together with citation of cases and argument. Thereupon the record in this proceeding was completed for initial decision.
The Complainant charges that the Respondent is making certain false and fraudulent representations and promises all with intent to deceive, as follows:
a. That the said “Rojelan Formula 66” furnished remitters by the respondent will provide “new life after 40”, that is to say will restore youthful pep and vigor, to persons beyond that age, by reason of its “Royal Jelly” content;
b. That the said “Rojelan Formula 66” furnished remitters by the respondent is of “great aid in the treatment of the ills of old age” by reason of its “Royal Jelly” content;
c. That the said “Rojelan Formula 66” furnished remitters by the respondent is of “demonstrated effectiveness” in the restoration of lost or depleted sex vigor to users because of its “Royal Jelly” content;
d. That the said “Rojelan Formula 66”, when used as directed, will render persons who have suffered miserably “with arthritis for years” “free from pain” because of its “Royal Jelly” content;
e. That the use of the said “Rojelan Formula 66” by persons In advanced years will restore such persons to the “energy of a youth of eighteen” by reason of its “Royal Jelly” content;
f. That the “Royal Jelly” content of the said “Rojelan Formula 66” provides a material and substantial therapeutic effect to the other ingredients in the said product.
Admission is made in the answer “that the exhibits attached to the complaint are an advertising solicitation mailed by respondent on or around February 14th, 1958.” Denial is made of the alleged representations, that the advertising claims are false and fraudulent and that the scheme was devised with intent to deceive.
REPRESENTATIONS AND PROMISES
It is noted that although all of the alleged representations are concerned solely with the direct efficacy of the product[2] they are restricted in that it is alleged that Respondent is falsely and fraudulently representing that it is the “Royal Jelly” content of the product which will produce the claimed results.
The unsolicited advertising material used by Respondent received in evidence by stipulation and without objection, and which was sent generally to the public, consists of a printed letter (Dept. Exhibit 1-A), a leaflet which shows the label used on the product (Dept. Exhibit 1-A-1), a copy of a newspaper item (Dept. Exhibit 1-A-2), and a smaller leaflet stating on one side to the effect that the “Royal Jelly” content has been substantially increased (Dept. Exhibit 1-A-3) and on the other side “the authority” in “Medical Research” supporting the value of “Royal Jelly.”
The meaning of the advertising material before me is determined by the ultimate effect made on the average reader for whom the advertising is intended and directed. In other words, the net impression which the advertisement is likely to make upon the general populace. Donaldson v. Read Magazine, 333 U.S. 178; Stunz v. U.S., 27 F.2d 575; Barnhill v. U.S., 96 F.2d 116; Charles of the Ritz Dist. Corp. v. F.T.C., 143 F. 2d 681.
Having thus examined the advertising material I reject Respondent’s assertion that there are portions of the advertising “which negate the idea that the only therapeutically important ingredient in the product is royal jelly.” (brief, p.13) In support Respondent refers to the smaller leaflet previously described (Dept. Exhibit 1-A-1). In this leaflet no therapeutic claims are made. It is the main circular, namely, the printed letter leaflet (Dept. Exhibit 1-A) that has all the therapeutic claims for the product. No mention is made therein or elsewhere in the advertising that the vitamins and minerals added to the product have anything to do with the questioned claims made for the product.
I also reject Respondent’s assertion that here are portions of the advertising “which negate any impression that the product will be effective in all cases.” (brief, p. 12) Respondent relies on this statement which appears in Department Exhibit 1-A-3:
Many authorities still dispute the efficacy of Royal Jelly, while others are able to establish it as a potential boon to mankind. The answer will perhaps lie with you. We, therefore, offer you the opportunity to use and test Royal Jelly in our specially developed formula, at our expense. You owe it to yourselves to try this new, completely safe formula on a Money Back Guarantee basis.
However, this statement is headed by a statement in bold print:
“MEDICAL RESEARCH PROVES VALUE OF ROYAL JELLY . . .HERE IS THE AUTHORITY”
Obviously, Respondent is saying that those who still dispute the efficacy of “Royal Jelly” must be wrong. But, regardless it seems clear that the average reader will not analyze or so carefully read any such statements as asserted by Respondent which, moreover, are nearly lost in the advertising which includes the refund offer. Furthermore, the refund offer, if read by the prospective purchaser, in the manner in which it is presented with the medical authorities claimed to support the efficacy of “Royal Jelly,” rather than acting as a disclaimer for all persons, fortifies the efficacy of the claims for all users.
Accordingly, I find that the Respondent is claiming that the “Royal Jelly” content of the product itself causes its effectiveness or efficacy as follows:
That men and women users, particularly those over 40 years of age and including those in advanced years, will obtain a renewed feeling of pep and vitality, increased vigor, added strength and energy. (Clearly expressed in Dept. Exhibits 1-A and 1-A-2). Respondent disputes this only to the extent that the literature claims that a user has the possibility of gaining such benefits because of the use of the word “may.” This I have rejected applying the aforesaid test. Therefore, I find that the representations alleged in charge (3) a. that persons beyond the age of 40 will be restored to “youthful pep and vigor” and those alleged in charge (3) e. which is in substance the same as (3) a, are substantiated. According to Webster’s New Collegiate Dictionary “youthful” is defined in the sense used, as “fresh.”
That it is of great aid in the treatment of the ills of old age. This is expressly stated in the advertising literature (Dept. Exhibit 1-A, 4th paragraph), and although such claims are said to be made by someone else, I deem them to be adopted by Respondent as his claims. U.S. v. John J. Fulton Co., 33 F.2d 507. Also the attempted disclaimer by Respondent in his interpretation of the meaning of such expression which follows said expressed statement, I deem is not effective in view of the clearness of the statement. Accordingly, I find that the representations in charge (3) b. are substantiated.
That sex vigor will be increased to the extent of the overall increase attained in vigor and vitality, pep, strength and energy. I make this finding since I am unable to distinguish between the claims made in the advertising in question of attaining certain sex vigor with the claims or representations reviewed by the Judicial Officer in the Departmental decision entitled Jenasol, et al., H.E. Docket No. 5/29. I, therefore, find that the representations charged in (3) c. are not substantiated, and, accordingly deny Complainant’s proposed finding in this respect. In this connection it is noted that the compromise agreement which Respondent made in the prior proceeding, a copy of same was received in evidence by stipulation and without objection on the issue of intent (Resp. Exhibit 2), contains the exact prohibition of representation about obtaining certain sex vigor representations that were agreed to in the compromise made in the said Jenasol proceeding and that Complainant in this instant case concedes that the Respondent is not in his current advertising breaching any of the conditions made in the compromise agreement. (Vol. I, Tr. 14, 17; Vol. II, Tr. 104)
That as charged in (3) d., persons who have suffered miserably with arthritis for years will render such users free from pain. I refer to this express representation made in Respondent’s citation of a certain testimonial letter given on the bottom of the back side of the printed letter circular (Dept. Exhibit 1-A). This testimonial as set forth in this advertisement, I deem Respondent has adopted as his own representation. U.S. v. John J. Fulton Co., supra.
As to the remaining alleged representations charged in (3) f. being in substance that “Royal Jelly” provides a substantial therapeutic effect to the other ingredients, counsel for Complainant in support thereof as well as all but one of the other charged representations, quotes a considerable portion of the circular letter and argues that such statements clearly show that all of the alleged representations are being made. Complainant does not point to the particular statement or statements in that part of the quoted circular which supports this charge and I have failed to find any statements in such quoted portion which supports these alleged representations. Accordingly, I deny that Respondent is making the representations alleged in paragraph (3) f.
In summary I find that the representations charged in subparagraphs a., e., b. and d. of paragraph (3) are being made by Respondent.
FALSITY OF REPRESENTATIONS
Since the representations concern medical matters the determination of whether they are false is, therefore, made from the testimony of qualified witnesses. Reilly v. Pinkus, 338 U.S. 269; Moxie Nerve Food Co. v. Holland, 141 F. 202; U.S. v. 50¾ Dozen Bottles, etc., 54 Fed. Supp. 759. Each party presented a medical doctor[3], both of whom I deem to be well qualified to give expert medical testimony on the matters in question. I, accordingly, reject Respondent’s proposed finding (included in those numbered 4, page 3) that the testimony of Complainant’s medical witness “is rendered insubstantial by reason of his bias, his interest in the subject matter and his general lack of knowledge concerning royal jelly and pantothenic acid.” This proposed finding is not supported by the record and, is, therefore, without merit.
Each medical witness testified for a full half-day and their testimony has been fully examined and carefully analyzed in making the determination whether the record substantiates the required burden of proof on the Complainant, namely, whether the representations made by Respondent as heretofore found, are false. (The question to be resolved is not whether these representations are true and, therefore, if the record fails to show their falsity it does not necessarily means that the representations are true).
I also reject as being without merit, Respondent’s proposed finding (included in those numbered 4, page 3), that said witness “failed to establish that his views represent the consensus of reliable, up-to-date medical opinion on the subjects on which he testified.” (See Vol. I, Tr. 42, 45, 89, 90)
Both witnesses testified that the main ingredient of “Royal Jelly” is pantothentic acid; that there are insignificant amounts of proteins, fats, carbohydrates, minerals and various members of the B complex vitamin in “Royal Jelly” (Vol. I, Tr. 33, 34; Vol. II, 18, 42, 43). It was the testimony of Complainant’s witness that pantothenic acid is not essential to human nutrition (Vol. I, Tr. 33, 93, 94) and an evaluation of his testimony shows that “Royal Jelly” is valueless to accomplish the claims heretofore found and that such testimony represents the consensus of present day informed medical opinion (Vol. I, Tr. 45). The testimony of Respondent’s medical witness shows that pantothenic acid is essential to human nutrition although the minimum requirement has not been established; that this is a difficult vitamin to so determine, viz., its minimum requirement, since unlike other vitamins, it does not get utilized on a one-for-one basis in terms of deficiency, that is, it is not a matter of simply requiring the addition of more of the acid to correct such a deficiency (Vol. II, Tr. 19); that its usefulness insofar as concerns the claims here in question, comes about through a process of utilization and acceleration of other foods and vitamins (Vol. II, Tr. 20). He testified that pantothenic acid is, therefore, used in multi-vitamin preparations and has therapeutic value (Vol. II, Tr. 20), and in this connection the product in question may be helpful to ease the pain of arthritis, to make a person feel more energetic, stronger, peppier, including older persons where such arthritic pain, lack of energy or pep, etc. is due to the need of the substances contained in the product (Vol, II, Tr. 27, 31-33). However, the testimony of this witness shows that insofar as “Royal Jelly” itself he has no knowledge of its effectiveness but that his views of the effectiveness of the product containing “Royal Jelly” on the claims in question are based on the combination of other added vitamins and minerals together with additional 2 milligrams of pantothenic acid. In other words, it appears from the testimony of Respondent’s medical witness that the amount of pantothenic acid in the “Royal Jelly” of Respondent’s product is not so “rich” as to be of any therapeutic value.
Measured by the medical testimony in this proceeding I find that it is the present day concensus of informed medical opinion that the “Royal Jelly” content of Respondent’s product is completely valueless to accomplish the claimed results; that this finding remains even though there is a diversity of informed opinion of the value of the main ingredient of “Royal Jelly” since this is an immaterial diversity as applied to the claims made by Respondent and in issue; that if the main ingredient has any value as to the claims in question, it is dependent upon other vitamins or substances in amounts much greater than the vitamins and minerals present in “Royal Jelly” and is, therefore, standing alone of no value. Accordingly, I find that the representations made by Respondent as previously stated, are entirely false.
Since Complainant did not make any charge that Respondent made false and fraudulent representations concerning the efficacy of the product, his offered medical testimony, therefore, did not include the value of the product itself. However, because of other issues in this proceeding Respondent’s witness did testify of the efficacy of the product and it is sufficient for this decision to state that the testimony of this witness shows that the product because of its added vitamins and minerals will be of certain value to users as previously mentioned.
FRAUDULENCY OF THE REPRESENTATIONS
This, as well as intent to deceive, later discussed, is an essential element. Reilly v. Pinkus, supra. This element is expressly charged in the complaint, being in substance that alleged representations of the efficacy of “Royal Jelly” are not only false but are also fraudulent. The question, therefore, is whether the representation that “Royal Jelly” is the reason for the claimed effectiveness of the product, constitutes a material misrepresentation regardless of whether the product will produce the promised results.
It seems clear that the average person reading the advertising and desiring to purchase the product would be so induced to part with his money to a material extent because of the “Royal Jelly” content which in this product has a “Higher Potency.” Furthermore, a person induced to part with his money in such a mail order enterprise where his sole information from the Respondent is that obtained from the advertising, is entitled to receive a substantial fulfillment of what he believes he is purchasing which in this proceeding means not only the benefits promised but that these benefits would result because of the “Royal Jelly” content. It is pertinent to cite the following portion of the Rosenberger case. Harris v. Rosenberger, 145 F. 449, 458:
“Our conclusion is that when a business even if otherwise legitimate, is systematically and designedly conducted upon the plan of inducing its patrons by means of false representations, to part with their money in the belief that they are purchasing something different from, superior to, and worth more than, what is actually being sold, it becomes an objectionable scheme…although what is being sold may approximate in commercial value the price asked and received. The difference between such a scheme or device and those where nothing whatever or nothing at all equivalent in value is intended to be returned for the money obtained is one of degree only, but not of principle. * * * A purchaser is entitled to receive what he is induced by the vendor’s representation to believe he is ordering and pay for, and not something which he does not order and may not want at any price.”
A reader is persuaded by Respondent’s representations to part with his money not to get the therapeutic benefits that vitamins and minerals may have but because of the claimed therapeutic value of “Royal Jelly” in the product. He is, therefore, paying for something which he may not want at any price if not otherwise induced.
Accordingly, I deem that the representations of the efficacy of “Royal Jelly” being also representations on which members of the public are entitled to rely, constitute material misrepresentations and not “merely incorrect statements.” (proposed finding #7 and p. 18, brief) It is not the product that is being tried but the claims made in connection therewith. Leach v. Carlile, 258 U.S. 138.
INTENT TO DECEIVE
Since November 14, 1949, this additional element of a clear showing of fraudulency or dishonesty of purpose has been required when the Supreme Court so held in the case of Reilly v. Pinkus, supra, because of the severity of the sanction. It appears from Complainant’s proposed findings and conclusions that he argues that the record supports this requirement on two separate grounds. First, that there was a reckless disregard for the truth and second because there is a universality of scientific opinion that the advertising representations are wholly unsupportable. On the first ground Complainant relies solely that the record supports this assertion of fact:
“Without any reliable scientific evidence of the efficacy of the ‘Royal Jelly’ content of his product, the respondent nevertheless undertook to offer it for sale through the mails upon representations that the product, and more particularly the ‘Royal Jelly’ content thereof, provides an effective treatment for various conditions and diseases, as specified in the complaint.”
Complainant argues that this shows such a reckless disregard for the truth that the ultimate finding of wrongful intent is warranted. In other words, Complainant is asserting that a mere showing of this bare fact of Respondent not having any reliable scientific evidence warrants said finding. Assuming that such a bare fact is sufficient,[4] I deem that the record does not substantiate Complainant’s requested preliminary finding of this bare fact which is not whether Respondent did not have sufficient reliable scientific evidence tending to establish the promised claims but whether the record shows that Respondent did not have any reliable scientific evidence. The only proof of Respondent’s knowledge or claim of knowledge of medical evidence regarding the various claims is his listing of “some of the extensive Medical and Laboratory research that has been done with Royal Jelly” (back side of Dept. Exhibit 1-A-3). The sole proof of the reliability or reputability of the material listed therein was furnished by the testimony of the two medical witnesses. However, Complainant’s witness failed to cover all the listed material (Vol. I, Tr. 75, 79-80) and although Respondent’s witness places “much credence” in several of the articles (Vol. II, Tr. 37) it was because of the pantothenic acid content of “Royal Jelly” and it is, therefore, not clear whether the articles so rated by this witness related to the claims as made for the “Royal Jelly” itself. Accordingly, I find that Complainant has failed to establish intent to deceive on the asserted ground of recklessness. This rejection does not necessarily mean that Respondent did have any reliable scientific evidence or that any of the said listed articles are reliable or reputable proof for the claims in question.
However, Complainant correctly asserts as supported by his cited case of Reilly v. Pinkus, supra, that an inference of intent to deceive was raised by reason of the advertising representations being wholly unsupportable according to the competent medical proof in the record. The determination, therefore, to be made is whether there are pertinent circumstances which refute this inference.
Respondent argues in substance that certain proposed findings (later set forth) relating to the prior settlement agreement, show that the present enterprise is being operated in good faith. Complainant, however, argues that the prior proceeding with the attendant agreement are of no relevancy on this issue because the name of the product was changed and because the evidence shows that the product involved in the instant proceeding “has a different quantitative composition.” I deem Complainant’s argument to be of no merit. The mere fact that the name of the product differs somewhat is of no significance on this issue and the only difference between the products as shown by the evidence in this proceeding, was the increase of the “Royal Jelly” content. However, it can not be presumed and there is no proof that such an increase renders the product so materially different that it can not be considered the same product as was involved in the previous proceeding.
Complainant also takes the position on this issue that the issuance of the new complaint constitutes effective notice of the Department’s rescission or termination of its acceptance of the agreement made in the prior proceeding. It seems clear that whether or not this position is correct is of no consequence. The undersigned is unable to comprehend any connection between the fact of a rescission and this issue of intent. Apparently Complainant intended to argue this as a point of law in anticipation that Respondent would assert as he did, in his proposed findings and conclusions, that the existence of a prior agreement bars the filing of a new complaint, the denial of which was previously mentioned.
Respondent asserts that the record shows the following:
“Every advertising claim contained in Departments Exhibits 1 and 2, which may be said to support the charges of the complaint, also appeared in Respondent’s Exhibits 3 and 4, the sales letter and broadside which formed the basis of the first proceeding. In other words, all of these advertising claims, except the article on General Ibanez, were before the Department in the first case. Their use was not forbidden by the Affidavit of Agreement, and the respondents continued to use them. The respondents did comply 100% with said Affidavit and they received no notice from the Department, prior to the second fraud order complaint, that their use of these claims was considered objectionable.” (Brief, p. 24-25).
Having reviewed the pertinent parts of the record, including the current advertising as compared with the prior advertising (Resp. Exhibits 3 and 4), the terms of the affidavit agreement (Resp. Exhibit 2), which set forth the representations Respondent is to refrain from making in the continued operation of the enterprise, and the charges made in the prior proceeding (Resp. Exhibit 1), I makes these findings:
That after Respondent was notified on September 20, 1957, by the Assistant General Counsel, Fraud Division, of the receipt of the affidavit of agreement from Respondent and the subsequent order of the Hearing Examiner indefinitely postponing the prior proceeding “there was no further discourse between the Post Office Department and the Respondent until October 24, 1958” when the present proceeding was instituted (Tr. 99). Therefore, Respondent’s proposed finding No. 11 as follows is granted:
That no notice was given respondents by the Department prior to the present fraud order complaint, that the affidavit of agreement was no longer satisfactory to the Department.
That three of the five representations in question made by Respondent were substantially made in Respondent’s prior advertising (Resp. Exhibits 3 and 4); that these three representations are as identified in subparagraphs a., e. and d. of paragraph (3) of the complaint; that two of these, namely, subparagraphs a. and e. were not charged in the prior proceeding and were not mentioned in the affidavit of agreement; that the other, namely, the representations as charged in subparagraph d. were also charged in the prior proceeding insofar as the effectiveness was the same, that is, no mention made in the charge that “Royal Jelly” was the reason for the alleged effectiveness, but such charge was not included in the affidavit; that one of the remaining two representations now in question, namely, the representations as charged in subparagraph b. which concerns the treatment of the ills of old age, were not covered in the prior advertisement since in the latter advertisement it was represented to the effect that the product or “Royal Jelly” would cure the ills of old age, which representations were covered in the agreement; and that the remaining representation concerning sex vigor was not made in the prior advertising but this is immaterial since there is no charge in this proceeding covering such representation as previously discussed. In summary, all but one of Respondent’s advertising claims now in question were before the Department in the prior proceeding, one of which though charged in the prior proceeding was not included in the agreement.
Accordingly, I deem in the light of all these circumstances, including the existence of the prior agreement, of no notice from the Complainant that the representations in question were objectionable and, therefore, that the agreement was not satisfactory and that the Respondent apparently attempted to comply with the terms of the affidavit of agreement by not only not making the representations he agreed not to make but by continuing to make to a substantial degree representations previously made and which were not objected to, that the raised inference of wrongful intent above stated has been accordingly lessened to the extent that in the absence of circumstances indicating bad faith in Respondent’s continued use of all but one of the claims, as asserted by Respondent (brief, p. 25), the Complainant has failed to prove this required element. Therefore, since the Complainant has failed as previously discussed, to point out any circumstances in the record directly indicating bad faith,[5] I find that there has not been clearly shown an “actual intent to deceive.” (Language quoted in Reilly v. Pinkus, supra, from Seven Cases v. U.S., 239 U.S. 510, 517).
OTHER SEPARATE DEFENSE
Aside from the merits of the issues of the representations made by the Respondent, their falsity, materiality and intent to deceive, Respondent asserts a defense “That the only mailings by respondents proved in this proceeding took place in February, 1958, and that there is no proof in the record that the respondents were conducting the enterprise described in the complaint on the date of the first hearing or on any other date within reasonable proximity thereof. Department’s exhibits 1 and 2.” (Proposed finding number 6) Respondent states that this is true since the only admission made by him was that the exhibits attached to the complaint constitute advertising solicitation mailed by Respondent on or around February 14, 1958. Respondent refers to the answer previously quoted, for this admission (Resp. brief, p. 15). It is, therefore, argued that since the postal fraud statues expressly condemn only a presently operating fraud scheme, the purpose of the statutes being not to punish the operator but to protect the public from the present operation of a fraudulent enterprise (see Donaldson v. Read Magazine, 333 U.S. 178, 184) the proof in the record of the questioned enterprise was not of a current operation. Respondent further asserts that the answer clearly raises the issue since denial was otherwise made of the charges.
I find that said requested finding of fact is substantially correct.[6] The set of advertisements being questioned by the Complainant in this proceeding is in the record as Department Exhibits 1-A,1-B and 2-A, all with subexhibits, each identical set having been received by the investigating inspector under three different test names. (Vol. I, Tr. 27-30) These sets of advertisements were mailed on March 11,1958, as shown by the postmark on each mailing envelope. I further find that the inspector’s test letter of purchase was mailed April 16, 1958 (Dept. Exhibit 2-B-1) and the test purchase was mailed by Respondent on April 19, 1958 (Dept. Exhibit 2-C).
It appears clear if this issue is raised, and it was here raised, that to invoke the postal fraud statues there must be shown that the objectionable enterprise is being presently conducted in view of the reasons as stated by Respondent, and that to show such a present enterprise the advertising in question must have been used within a reasonable proximity of the filing of the complaint. Therefore, in view of the foregoing findings, I further find, that Complainant has failed to show that the enterprise in question is currently being operated since the questioned advertisements were used more than seven months before the filing of the complaint which I deem does not constitute as being within a reasonable proximity thereof. It is not amiss to point out at this time that this question of presently conducting an objectionable operation is entirely different from that of where an objectionable enterprise is abandoned but nevertheless the postal fraud statues may be invoked. Such abandonment may have come about shortly before or after the filing of the complaint.
CONCLUSION OF LAW
As it has not been shown that the questioned enterprise is being presently conducted and that the Respondent is operating the questioned enterprise with intent to deceive, I conclude that Respondent is not violating the invoked statutes as charged.
Requested findings of fact and conclusions of law not herein specifically found or concluded have been considered and are regarded as being immaterial or unjustified.
In view of the foregoing conclusion of law this proceeding is dismissed.
Hearing Examiner
[1] Prior to departure for Chicago for this hearing the oral motion made by Respondent at the commencement of the hearing, to dismiss the complaint because of an agreement reached in settlement of a prior proceeding, together with corresponding bench ruling denying same, were reviewed. (Affirmation of Ruling entered January 9, 1959.) Since Respondent does not present anything new in his assertion of this separate defense again stated in his proposed findings and conclusions brief (p. 28) I refer to the bench ruling and affirmation of same.
[2] There is no dispute that the product contains the ingredients listed on the label with each capsule having substantial amounts of Vitamins B and C plus 2 milligrams of pantothenic acid; that the double strength capsules contain 37 ½ milligrams of “Royal Jelly” and the single strength 183/4 milligrams; that the maximum dose is 2 capsules per day (Resp. proposed finding numbered 1).
[3] Dr. Kenneth D. Campbell, for the Complainant, graduated from Boston University School of Medicine in 1940. During World War II he was on active duty with the Army Medical Corp. being discharged with the rank of Lieutenant Colonel at the end of hostilities. Since 1946 he has been employed by the Food and Drug Administration and is presently Associate Medical Director of the Drug and Device Branch, Bureau of Medicine. He is also in private practice. As part of his duties with said Bureau he keeps abreast of current developments in medicine which includes reviewing appropriate medical literature and that in connection with the present inquiry concerning Royal Jelly had made such a research. He is a member of the American Medical Association, various other medical societies and is on the staff of Leland Memorial Hospital and Prince Georges General Hospital.
Dr. Harold Laufman received his M.D. degree from Northwestern University in 1948. Prior to that time he received a Bachelor of Science and Masters Degrees. Since 1952 he has been Director of Experimental Surgery at Northwestern University. He is in private practice specializing in surgery and belongs to numerous medical associations and societies. He has also written over 80 medical articles and was co-author of a textbook. He is also associated with the Passavant Hospital and the Veterans Administration Research Hospital.
[4] The three cases cited by Complainant (proposed findings, p. 6) had additional or other circumstantial and pertinent proof showing either a reckless disregard of the truth or fraudulent intent.
Also the five cases cited by Complainant under the topic “Conclusions of Law” (proposed findings, p. 9) in support of this issue because of the claimed recklessness, are either not applicable because they do not involve this issue being Federal Trade Commission or misbranding cases, or substantial proof was in the record of numerous direct circumstantial evidence showing such intent.
[5] Compare Vibra Brush Corp. v. Schaffer,152 F. Supp. 461 where it was held that the exaggeration of the product far beyond the scope of the advice Respondent received from its own experts, is cogent circumstances of such bad faith. Also in this cited case proof showing a preparation of a defense in advance of a charge constitutes such direct circumstances of bad faith.
Complainant’s assertion under “Conclusion of Law” (p. 9, proposed findings) that Respondent knew or should have known of the falsity of the representations, without any citation of proof in the record in support of same and even without any argument, therefore, constitutes merely a bare assertion or assumption.
[6] Although Respondent in the answer “allege that no general solicitation has been mailed since September 26, 1959,” this does not constitute an admission under the Rules of Practice or proof that the advertising literature in question was mailed after February 14, 1958.