In the Matter of the Complaint Against NATURAL PRODUCTS, P. O. Box 10047 at Newark, New Jersey 07101 and 266 Middle Street at Portsmouth, New Hampshire 03801 P.S. Docket No. 1/59August 30, 1972 Thomas A. Ziebarth, Esq., Consumer Protection Office, Law Department, U. S. Postal Service, for Complainant. Robert Ullman, Esq., Bass & Ullman, New York, New York; and Raymond J. Salmon, Esq., Clinton, Massachusetts, for Respondent.
Before: John Lewis , Administrative Law Judge.
This proceeding was initiated by the filing of a complaint by the General Counsel of the United States Postal Service on February 22, 1972, charging the above-named Respondent with conducting a scheme or device for obtaining money or property through the mail by means of false representations, in violation of 39 U. S. Code 3005. In substance, said complaint charges Respondent with having made various false representations in advertising matter concerning the nature and effectiveness of its product "SEACREME", in the removal of fat and reduction of body weight. Respondent appeared by counsel and filed answer denying that the representations alleged in the complaint were materially false, and affirmatively alleging that "at a hearing on the complaint the respondent will present expert scientific testimony in support of the truth of said representations."
Simultaneously with the filing of its answer, Respondent filed motions for (a) a continuance of 60 days and (b) a change of venue from Washington, D. C. to Boston, Massachusetts. The basis of the motion for a continuance was the fact that it would allegedly require 30 days to 60 days for Respondent to prepare "scientific and technical testimony" in support of its defense. The ground of the motion for a change of venue was the assertion that it would impose an "undue burden" on members of Respondent's firm residing in New England, and on unidentified expert witnesses to appear in Washington. By order dated March 15, 1972, the undersigned granted Respondent a limited continuance of approximately three weeks, on the ground that Respondent's motion did not set forth sufficient facts to justify a continuance of greater duration. Its motion for a change of venue was denied on the ground that Respondent's motion did not contain the specific information required under 952.15 of the Rules of Practice; however, Respondent was granted leave to renew its motion by submitting a new application setting forth the required information. While Respondent did apply for, and was granted, an additional continuance of two weeks, it did not renew its motion for a change of venue.
A hearing for the reception of evidence in support of, and in opposition to, the complaint was held on April 25, 1972, in Washington, D. C. Both parties appeared by counsel and were afforded full opportunity to be heard, and to examine and cross- examine witnesses. Counsel for Complainant called three witnesses,
(1) a postal inspector, through whom he sought to establish that Respondent's method of operation involved the obtaining of money through the mail by means of statements made in advertising matter;
(2) a chemist, through whom he sought to establish the chemical ingredients in Respondent's product; and (3) a physician through whom he sought to establish the falsity of the representations allegedly made in Respondent's advertising matter. Counsel for Respondent elected not to offer any testimony or other evidence, but relied on the cross-examination of Complainant's expert witnesses as establishing the failure of Complainant to make out a prima facie case. Based on the request of counsel for Respondent, the record was held open for one week for the purpose of affording counsel an opportunity to secure certain consumer witnesses to testify on Respondent's behalf. No request was made for an opportunity to present testimony or other evidence by expert witnesses. Upon notification that counsel for Respondent would not avail himself of the opportunity to call any witnesses, the record was closed and a date fixed for the filing of proposed findings. Proposed findings of fact and conclusions of law were thereafter filed on behalf of both parties, on June 15, 1972.
After having carefully reviewed the evidence in this proceeding and the proposed findings and conclusions, 1/ and based on the entire record, including his observation of the witnesses, the undersigned makes the following:
FINDINGS OF FACT
A. The Alleged Solicitation of Money Through the Mail
1. Respondent is engaged in the business of selling a certain lotion or liquid product which it designates as "SEACREME." Public attention is attracted to said product by advertisements placed in newspapers and other publications of general circulation, and through direct mail advertising (Admitted, Ans. par. 3; CX 1; CX 2-B, C; CX 4-B, C; CX 6-B, C; CX 7-B, C; Tr. 6, 10, 12, 15).2/
2. As part of its advertising material Respondent includes an order form for use in ordering its said product. Said order form requires that in ordering "SEACREME" payment must be made by the customer in case, check or money order, and states that "C.O.D.'s" are not accepted. The record establishes that Respondent does, in fact, obtain money through the mail from customers who have detached and mailed the order form in payment of Respondent's product "SEACREME" (Admitted, Ans. par. 3; CX 1-4; Tr. 6, 9-15).
B. The Alleged Representations
3. Respondent's advertising matter, by which it solicits money through the mail, contains various statements concerning its product "SEACREME." A copy of such advertising matter, which is identical to various advertisements introduced in evidence herein, is attached hereto as Appendix "A" (CX 1; CX 2-B; CX 4-B, C).
4. The complaint charges that Respondent has made various representations to the public concerning its product by means of statements made in its advertising matter. Respondent has not denied making the representations alleged in the complaint and may, therefore, be deemed to have admitted them under 952.10(b) of the Rules of Practice. In any event, based on the advertisements which are in evidence, it is found that Respondent does make the representations alleged in paragraph 3(a) - (i) of the complaint, which allegations are incorporated herein by reference as if fully set forth. Such representations are, in substance, that "SEACREME"
(1) will cause fat and unwanted inches to disappear instantly when applied to any portion of the body, (2) will result in a permanent loss of as much fat or inches as the user desires, (3) does not require dieting, exercise, drugs or pills or the wearing of rubberized garments to achieve a reduction in fact or weight, (4) is a breakthrough in spot reducing, developed in Europe and (5) is formulated from certain "exotic algae and planktons" which possess a "natural reducing power".
C. The Alleged Falsity of the Representations
5. The evidence offered concerning the falsity of Respondent's representations consists of testimony and other evidence offered through, (a) Jacob S. Sage, a chemist employed by the Food and Drug Administration of the Department of Health, Education and Welfare, and (b) Dr. Peter N. Horvath, a physician specializing in diseases of the skin. Mr. Sage conducted standard chemical tests on samples extracted from each of two bottles of Respondent's product, "SEACREME." One bottle was designated as "SEACREME GREEN" and the other as "SEACREME RED." Each contained a viscous liquid, one being green in color and the other red. Mr. Sage's tests established that the ingredients of each of the bottles consisted of slightly over 97% water and a non-volatile residue of less than 3%, the latter consisting of "a cellulose derivative, a parahydroxy benzoate ester and a green / or re d / dye." The only active ingredient in the product was the cellulose derivative, the parahydroxy benzoate ester being a preservative and the green dye or red dye being used for coloring purposes (CX 8, 9; Tr. 23-24). The testimony of Dr. Horvath establishes that a product with the ingredients found to be present by Mr. Sage will have no effect whatsoever on the metabolic process, so as to cause a removal of fat deposits or a reduction in weight. The volatile liquid element in Respondent's product may produce a feeling of "lubrication" or "moisturizing," but it will have no effect internally. The residual cellulose (the parahydroxy benzoate ester being merely a preservative substance), will not penetrate the skin and will wear off in time. Dr. Horvath further testified that, without regard to the particular ingredients in Respondent's product, there is no known substance or chemical that can be applied to the skin which will affect the metabolic process so as to cause a reduction in fat deposits or a loss of weight (Tr. 55, 59-61).
6. As previously noted, Respondent offered no affirmative evidence to establish that its product will perform as represented, but contends in its Proposed Findings that the cross-examination of Complainant's expert witnesses establishes the lack of credibility and substantiality of their testimony. It contends, in essence, that Mr. Sage's tests failed to adequately establish the ingredients of Respondent's product, and that since Dr. Horvath's testimony is based on the inadequate tests conducted by Mr. Sage, it too cannot be accepted. With respect to Mr. Sage's tests, it is Respondent's position that, (a) he did not employ all of the procedures necessary to determine what the volatile portion of Respondent's product was, (b) he did not know the nature of the cellulose derivative now what function it served, nor did he know the quantitative breakdown of the residual ingredients, (c) he did not know whether the samples tested were identical in content, and (d) he conceded that he did not "know for a fact" that there were no other Respondent's position concerning the lack of credibility and substantiality of Mr. Sage's testimony to be wholly lacking in merit for the following reasons:
a. Insofar as the volatile component is concerned, Mr. Sage conducted such tests as seemed appropriate to him, as a professional chemist, to determine the nature of such component. He found that it was water, and eliminated the possibility that it might consist of alcohol or some other volatile substance by conducting an appropriate test. More importantly, however, it was immaterial for his purposes to determine the precise nature of the volatile substance since he was primarily concerned with ascertaining the nature of the residual ingredients, after the evaporation of the volatile element, these being the only active elements in the product (Tr. 28-31, 33-34).
b. He was not asked to, and it was immaterial for purposes of his test, to determine the nature of the cellulose derivative; nor was it necessary to make a breakdown between the cellulose and the other two residual components consisting of a preservative and a dye. There is no indication that Dr. Horvath's testimony concerning the lack of effectiveness of Respondent's product was premised on the product's containing any particular type of cellulose derivative, or on any quantitative breakdown between the cellulose and the other two residual ingredients.
c. Contrary to Respondent's contention, the two samples tested by Mr. Sage were substantially identical in content. Any differences that existed were due to differences in the manufacturing process, and were not chemically significant (Tr. 44-45).
d. Mr. Sage's putative admission that he didn't know "for a fact" that there were no other ingredients present in the bottles is of no significance. The witness' testimony establishes that he conducted a standard test to ascertain the active ingredients and that he had determined to his satisfaction what such ingredients were. Counsel for Respondent persisted in asking him whether he had "conclusively determined" that these were the only ingredients, and whether he knew "as a fact" that they were the only ingredients. As an objective scientist he declined to say what he had "conclusively determined," stating instead: "Those were the findings that I came up with." When asked if that was "all you have conclusively determined," that "those are the sole ingredients," he responded:
"To my satisfaction, yes, sir ... To my satisfaction I conducted those tests which were necessary to show what ingredients were present in this product" (Tr. 50, 51). When counsel again asked whether he knew "for a fact that there are no other ingredients contained in either of these bottles," he responded that he did "not know for a fact." It seems evident that what Mr. Sage was saying was that he was satisfied that the ingredients of the samples were as his tests had indicated, but that as a scientist he could not say that he had determined this "conclusively." Having testified that he was satisfied that he had conducted the proper tests which correctly disclosed the ingredients of the samples, it was not incumbent upon him to state that he knew "conclusively" or "for a fact" what was in the samples. In any event, whatever uncertainty may appear from his testimony, it is not of such a nature, in the absence of positive, countervailing evidence by Respondent concerning the contents of the product, as to destroy his credibility or the validity of his tests.
7. With respect to Dr. Horvath's testimony, Respondent argues that his opinions are not worthy of acceptance for the reasons that, (a) he is not qualified to give an opinion as to the efficacy of Respondent's product, (b) his opinion was based on Mr. Sage's incomplete analysis of the ingredients of Respondent's product, and (c) aside from these tests, Dr. Horvath's opinion was not based on substantial evidence. In the opinion of the undersigned, the objections raised by Respondent to Dr. Horvath's testimony are not well taken, for the following reasons:
a. The fact that Dr. Horvath is a dermatologist rather than an internist specializing in problems of obesity does not require, as Respondent argues, the rejection of his testimony. The product here involved is not one for internal consumption where the expertise of an internist might be required, but is a lotion or liquid which is to be applied externally on the skin. Its efficacy, if any, would result from its penetration of the skin and its chemical reaction thereafter. This would appear to be a matter peculiarly within the competence of a specialist in matters pertaining to the skin, rather than of an internist (Tr. 67). In any event, even if an internist could be deemed to have a greater degree of expertise in this field, Dr. Horvath, as a medical doctor with a demonstrated knowledge in the field of the action of drugs through the skin, is prima facie entitled to have his testimony credited and accepted, in the absence of countervailing testimony of greater persuasiveness. No such evidence was offered by Respondent.
b. Since Mr. Sage's tests do adequately establish the contents of Respondent's product, Respondent's attack on Dr. Horvath's testimony as not being based on adequate tests must be rejected. However, even assuming that the tests did not adequately establish the contents of Respondent's product, Dr. Horvath's testimony is sufficient to support the complaint since his opinion as to the lack of efficacy of the product was based not merely on the ingredients revealed in Mr. Sage's tests, but on his expert knowledge and judgment that there were no known drugs to be applied topically which would penetrate the skin and cause a removal of fat deposits or a reduction of weight (Tr. 67-68).
c. Respondent questions the value of Dr. Horvath's opinion concerning the lack of effectiveness of its product because of his alleged lack of familiarity with the nature of algae and planktons, because of alleged contradictions in his testimony concerning the ability of drugs topically applied to affect the body processes, and because he had not conducted any actual tests with Respondent's product. None of these objections is valid. Dr. Horvath did indicate a familiarity with the uses of algae and planktons, and testified that they had no known value in a reducing regimen (Tr. 56-57). Moreover, there is no evidence in the record that Respondent's product does contain algae and planktons, or that such products are effective in fat removal and weight reduction. The purported contradiction in Dr. Horvath's testimony concerning the action of topically-applied drugs does not exist. Contrary to Respondent's contention, Dr. Horvath did not testify on direct examination that there were no drugs or chemicals topically applied which could affect the body's processes. He indicated that he was fully aware that there are hormones which can be externally applied to affect the body processes, but made it clear that there are no such drugs which are capable of eliminating fat deposits (Tr. 60-61, 67). With respect to the matter of Dr. Horvath's failure to conduct any tests on Respondent's product, his testimony reveals that, aside from the fact he was not requested to do so in preparing to testify, he would have regarded the conducting of such tests as "wasting your money," in view of the state of medical opinion and knowledge in this field (Tr. 84). The testimony of qualified medical experts based on accepted medical knowledge may not be disregarded merely because they did not conduct "actual tests of the drug to determine its effects in relation to the particular representation alleged to be false." Reilly v. Pinkus , 338 U.S. 269, 274. This is particularly true in the instant case where no test evidence was offered by Respondent to impugn or raise any doubt as to the validity of the opinions expressed by Dr. Horvath.
8. Based on the credited and uncontradicted testimony of Mr. Sage and Dr. Horvath, it is concluded and found that Respondent's representations, as heretofore found, are materially false since Respondent's product "SEACREME" will not in any way remove fat or cause a reduction in weight.
CONCLUSION OF LAW
Respondent is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations, in violation of 39 U. S. Code 3005. It is accordingly recommended that an order in the form attached, as provided in 39 U. S. Code 3005, should be issued.
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