In the Matter of the Complaint Against MARK EDEN at San Francisco, California P.O.D. Docket No. 2/204 07/16/68 Rosenblatt, Peter R. APPEARANCES: William F. Lawrence, Esq.; Associate General Counsel, Arthur S. Cahn, Esq.; Abraham Levine, Esq.; Office of the General Counsel, Post Office Department for the Complainant Nathan G. Gray, Esq.; American Trust Building, Berkeley, California, John Wells, Esq.; Jack Banker, Esq.; Stark, Simon & Sparrowe, Financial Center Building, Oakland, California for the Respondent
The Respondent, Mark Eden, by motion filed May 27, 1968, moved the Judicial Officer for reconsideration of the Departmental Decision entered herein on April 30, 1968 by the Acting Judicial Officer. The Complainant, General Counsel, opposed the motion by reply filed June 21, 1968. The Respondent "renewed" its request for oral argument of the motion in a letter application dated June 26, 1968.
The Departmental Decision, in brief, reversed a hearing examiner's holding that the Respondent had not violated a certain "affidavit of discontinuance" (Hereinafter the "Affidavit") executed on its behalf on January 30, 1967, in which it agreed to discontinue making certain types of advertising claims for its product, a device for the enlargement of the feminine bust. The Departmental Decision also held that the procedures used in hearing and determining the Complainant's charge of violation were proper and conformed with the provisions of the Affidavit, found that the Respondent's proposed new advertising would not breach the Affidavit, and ordered the parties to see to the return of all sums remitted to Respondent in response to advertisements violating the Affidavit. The Respondent was permitted to retain sums deposited in the trust account established pursuant to Section 5 of the Affidavit which were remitted in response to the later, non-violative advertisements.
The Motion is based upon the following contentions:
A. The Departmental Decision that Respondent breached the Affidavit is erroneous on the merits, in that it allegedly:
1. Ignores statements in the advertising copy which negate the claimed violation of the Affidavit.
2. Ignores the parties' own interpretations of the Affidavit.
3. Fails to hold that the corrected advertising copy cured the breach of the Affidavit nunc pro tunc.
4. Holds that the Department may not be bound to an interpretation of the Affidavit by its officials.
5. Fails to consider the results of a certain market survey.
B. The Departmental order for refund of the purchase price of the Respondent's products is not warranted by the Departmental Decision itself, in that it allegedly:
1. Requires refunds to customers who have achieved cosmetic benefits.
2. Requires refunds to customers who did not rely upon the aspects of Respondent's advertising which breached the Affidavit.
3. Requires refunds to customers who did not themselves return the product.
4. Contravenes the Affidavit provisions which afford the Respondent the right to cure a breach thereof.
5. Is inconsistent with the Complainant's past conduct.
6. Contravenes the Affidavit provision which provides that the hearing examiner who conducts the hearing on the alleged breach of the Affidavit shall make distribution of the impounded funds.
C. The Acting (sic) Judicial Officer should consider further evidence.
In its reply the Complainant relies largely upon the arguments which it previously advanced on the appeal.
The greater part of the Respondent's claims are restatements of contentions advanced on appeal. I find that the Acting Judicial Officer's Departmental Decision dealt with each of these fairly and properly, and I find myself in accord with each of his findings. It will not, therefore, be necessary to restate the grounds for each of these findings, since they are amply set forth in the Departmental Decision.
A number of the Respondent's points do, however, require some further comment.
Respondent claims that the Affidavit permitted it to cure all alleged breaches thereof nunc pro tunc. I find no support for that contention in the controlling Section 5 or elsewhere in the Affidavit. In fact if the provision relative to the revision of challenged advertising matter has any practical significance, it could only be that a timely and acceptable revision would permit a continuance of the Affidavit "regime" even after the Affidavit has been violated. If the Respondent were to fail to submit acceptable revised copy or to prove at a hearing that no revision was necessary, "the order applied for may be thereupon issued" (Section 5) and the Affidavit would then have passed out of existence as a factor in the parties' relationship. The fact that the Respondent revised its copy to meet the Affidavit's requirements explains the Department's willingness, despite the violation, to refuse the Complainant's demand for the issuance of a fraud order. Instead the Departmental Decision imposes a lesser penalty, requiring a return of only such of the remittances as are attributable to sales resulting from advertising matter violating the Affidavit.
It would have been manifestly illogical for the Respondent to be permitted to retain the fruits of advertising found to have violated the Affidavit. By the same token it would have been unjust, under the Affidavit's terms, to refuse to grant the Respondent credit for having appropriately revised its advertising.
In refusing to permit the Respondent to accept any of the funds remitted in response to advertising effectively denominated fraudulent, the Department is under no legal or moral obligation to protect the Respondent from the logical, usual and foreseeable consequences of its own violation. No distinctions need be drawn in this case between the various categories of remitters--satisfied and dissatisfied, trusting and skeptical, or those who actually demanded refund and those who did not. Even if it were technically possible to draw all of these distinctions, justice would not require that it be done under the Affidavit any more than if the returns had been directed pursuant to a fraud order.
The Respondent's contention that an official of the Post Office Department "interpreted" the Affidavit in such a manner as to commit the Department to an advance approval of the Respondent's advertising, is fully rebutted in the Departmental Decision. I wish here only to reemphasize the point that this official's letter, to which Respondent refers, and Section 9 of the Affidavit itself, spell out a flat contradiction of Respondent's proposed "interpretation."
Under its Contention C, the Respondent argues that the Judicial Officer should consider further evidence to the effect that the Respondent's product is "highly effective", that its advertising is greeted with skepticism by its customers, and that a large percentage of its customers are satisfied with the product.
It should be perfectly clear to the Respondent that the only questions at issue in this proceeding are 1) whether the Respondent's advertising meets the requirements of the Affidavit and, 2) if not, whether a fraud order or some lesser penalty should be levied against the Respondent. The evidence presented does not bear upon those questions, and is therefore excluded from consideration herein.
It does raise the fundamental issue of the Respondent's product's efficacy--a matter which the Complainant has not seen fit to raise, though it did in the National Health case (P.O.D. Docket No. 2/271) decided April 24, 1968. Section 6 of the Affidavit clearly points the way in which the Respondent may, if it wishes, bring the ultimate efficacy of the product to a test:
"That in the event scientific or medical proof in the future should establish the efficacy of the product in question for the purposes advertised in the advertising matter agreed to be discontinued herein, Respondent or the undersigned may in future advertising matter, employ representations as to the alleged scientifically or medically established efficacy of the aforesaid product, it being understood that the General Counsel's office reserves the right to apply for the issuance of an order pursuant to the statute cited in the caption hereof (Note: 39 U.S.C.A. 4005) in the event it is believed that such scientific or medical proof is lacking, and, in such event, it is agreed that the undersigned may request a hearing as provided above;"
On the other hand, should the Complainant wish to broaden the basis of its inquest into the Respondent's claims from the wording of its advertising to the product's actual efficacy, it need not await a decision on Respondent's part to make claims of medical or scientific efficacy pursuant to the said Section 6. Section 8 of the Affidavit provides the Complainant with full authority to proceed under 39 U.S.C.A. 4005, notwithstanding the Affidavit's other provisions.
The instant proceeding, therefore, is not appropriate to a consideration of Respondent's proffered evidence and the determinations contained herein are made without regard thereto.
Finally, the Respondent's request for oral argument of this motion is denied. The issues raised here are, as aforesaid, not new and have been appropriately dealt with by the Departmental Decision.
For all of the foregoing reasons, the Respondent's motions for oral argument and for reconsideration of the Departmental Decision herein are in all respects, denied, and the Departmental Decision is confirmed.