In the Matter of the Complaints Against HEALTH GUARD, P. O. Box 1344 at Hallandale, FL 33009 P.S. Docket No. 6/114 December 29, 1978 Quentin E. Grant Administrative Law Judge APPEARANCES: H. Richard Hefner, Esq. Consumer Protection Office Law Department U. S. Postal Service Washington, D.C. 20260 Joel Heim 1420 Diplomat Parkway Hollywood, FL 33019
In the Matter of HEALTH GUARD PS Docket No. 6/114 Room 10811 U. S. Postal Service 475 L'Enfant Plaza, S.W. Washington, D.C. Wednesday, December 6, 1978 The above-entitled matter came on for hearing, pursuant to notice, at 10 o'clock a.m. BEFORE: THE HONORABLE QUENTIN GRANT Administrative Law Judge APPEARANCE: On behalf of U.S. Postal Service: H. RICHARD HEFNER, ESQ. Consumer Protection Office Law Department U. S. Postal Service Washington, D.C. 20260
JUDGE GRANT We will go on the record. This is the time and place set for a hearing in the matter of the complaint against Health Guard, P.O. Box 1344 at Hallandale, Florida. I note that there is no appearance by or on behalf of Respondent Health Guard. In yesterday afternoon's mail I received a letter from Joel Heim, who represents Respondent. His letter requests three things. First, dismissal of the complaint on the ground that Health Guard is a non-entity under the law, referring to the definition of "person" under the Administrative Procedures Act, as including, "Individuals, partnerships, corporations and associations". Respondent says that since Health Guard is a product and not one of the entities mentioned in the definition, this proceeding is unlawful and should be dismissed. Do you have anything to say in that connection, Mr. Hefner? MR. HEFNER: Yes, Your Honor. I first formally enter my appearance as H. Richard Hefner of the Consumer Protection Office, Law Department, of the U. S. Postal Service. The position of Respondent, to my mind, is invalid and facetious. Health Guard is not a product, and if it were, it would not be grounds for dismissal on the basis that he seeks. The caption of the complaint in this proceeding refers to Health Guard, as does the advertisement which is attached to the Complainant's Exhibit A, and samples of which will be introduced into evidence at this hearing today. That is the name under which Respondent seeks remittances to be sent through the mail. The product in reference in this proceeding is the "Energy Pill". Now, I would not concede that if we had brought the action under the name of Energy Pill - as the name of the product - that his position would be correct because, there again, we would bring the proceeding against the name in which he seeks the remittances. JUDGE GRANT Just a minute, Mr. Hefner, Dr. Cordaro wants to say something to you. We'll go off the record. (Discussion off the record.) JUDGE GRANT: Back on the record. MR. HEFNER: This action is in the nature of an In Rem. action in which we seek public protection through interception of mail, based upon specific addresses. The Food and Drug Administration brings their actions for seizure against a certain number or quantity of a product, so many bottles of this or that, or so many packages of a product named in part thus-and-so. There is any number of cases in which the action is predicated against the actual name of the product. JUDGE GRANT: You have satisfied me, Mr. Hefner, that this complaint was properly brought against Health Guard, and I deny the motion for a dismissal of the complaint on the grounds advanced by Mr. Heim in the letter I received yesterday. Second, Mr. Heim says that because the location of the hearing was transferred to Miami last August, it should be heard there at this time, instead of in the District of Columbia. As to this position of Respondent I will simply state that the location of the hearing was transferred to Miami at Respondent's request and for its convenience last August. That I was present in Miami on August 18, 1978, at which time Respondent had the opportunity to present its case. That, instead, Respondent - by Mr. Heim - chose to enter into a consent agreement with Complainant, which eliminated the requirement of a hearing, or at least appeared to at that time; that upon being advised by the parties, and particularly Mr. Heim, that he agreed to the terms of a consent agreement, the basic terms of which were read into the record by Mr. Hefner. I continued the matter for the purpose of execution of the formal written consent agreement and returned to Washington. On September 25 Complainant filed a motion to reschedule a hearing in Washington on the ground that Respondent had refused to execute the proper written agreement sent to him by Mr. Hefner on August 29. By my Orders of September 28 and November 2, 1978, Respondent was given ample opportunity to respond to Complainant's motion and failed to do so within the time specified in those Orders. Consequently, on November 22 I issued an Order, setting the hearing for December 6 in Washington, D.C. Since Respondent had its opportunity for a hearing in Miami, and since this rescheduling of a hearing was made necessary only because of Respondent's unexplained failure to execute the written consent agreement, to which it had orally agreed, I think it is entirely proper that the hearing be held in Washington. Three, Respondent asks that the hearing be continued once again. It appears that Respondent failed to claim at the Post Office in Hallandale, Florida, my Orders of November 2 and November 22. In his letter of December 4, received by me yesterday, Mr. Heim made general statements about confusion at the Hallandale Post Office concerning Respondent's mail. However, there is no denial that Respondent and Mr. Heim received notification that the two Orders - sent by Certified Mail - were being held for him at the Hallandale Post Office, and that he failed to claim them. Heim asserts that this office and the Post Master at Hallandale failed to make proper service of the Notice of Hearing, citing paragraph 952.8 of the Rules of Practice, which says that if after five days the Post Master can find no person to accept service of the Notice of Hearing, the notice must be served in the usual manner, as other mail, addressed to Respondent. In response to that contention I simply state that the rule cited by Mr. Heim applies only to service of the original Notice of Hearing and the complaint, and has no application to notices of rescheduled hearings. Respondent has shown no good reason for further continuance of the hearing, therefore the request for further continuance is denied. Since Respondent has failed to appear at the hearing this morning, I will receive Complainant's evidence at this time in accordance with Rule 952.11.In a complaint filed on June 30, 1978, Complainant alleged that respondent is engaged in the conduct of a scheme for obtaining money through the mail in violation of 39 U.S.C. 3005.
Specifically, the complaint (para. III) alleges that by means of advertising matter distributed to the public, calculated and intended to induce readers thereof to remit money or property through the mails to respondent, respondent represents that its products, the ENERGY PILL,
"(a) *** will relieve fatigue and provide energy. (e.g., 'Contains TEN active ingredients that will promote good health and give your body that active, alive feeling. No need to be tired, listless and down.' etc.)
"(b) *** promotes the loss of body fat. (e.g., 'Watch your body firm up and shape up to a newer, more youthful you.' 'Peps you up while you lose weight at the same time.' etc.)
"(c) *** will beneficially alter the personality of the user. (e.g., 'Now come alive - have more confidence in yourself. Be an outgoing person. Acquire new friends]' etc.)
"(d) *** will promote muscular development. (e.g., 'Watch your body firm up to a newer, more youthful you.' etc.)
The complaint further alleges that such representations are materially false in fact and requests the issuance of an order against respondent conforming to 39 U.S.C. 3005.
Respondent, by one Joel Heim, filed an answer to the complaint denying the allegations of false representation and interposing numerous constitutional objections to the proceeding involving the Fourth through the Ninth Amendments to the Constitution.
Under the name Diet Lake, Inc., Mr. Heim requested that the hearing be held in Miami, Florida. Although Diet Lake, Inc. was not at the time and is not now a party to this proceeding, I treated the request as one made by respondent and pursuant thereto a hearing was scheduled for August 18, 1978, in Miami. The parties appeared before me at the appointed time and announced that they had agreed on the terms of a Consent Agreement to be reduced to writing at a later date. Mr. Heim stated on the record that he was in agreement with the terms of the proposed Consent Agreement as summarized by Mr. Hefner.
The announcement of the proposed Consent Agreement obviated the necessity for a hearing. Accordingly, I continued the matter to September 22, 1978, to give the parties the opportunity to finalize the agreement.
On September 25, 1978, Complainant moved to reschedule the hearing because of respondent's refusal to execute a written Consent Agreement. Respondent was given repeated opportunity to respond to the motion and failed to do so. Finally the hearing was rescheduled for December 6, 1978, in Washington, D.C. The day before the hearing respondent filed a "Motion to Dismiss" the proceeding on the ground that the named respondent, Health Guard, is a non-entity under the law, not being a "person" under the definition of person contained in 551(2) of the Administrative Procedure Act. By letter received on December 5, respondent requested that the proceeding be continued because of improper service of the Notice of Hearing and because the hearing should be held in Miami.
At 10:00 A.M. on December 6 I opened the hearing as scheduled and denied respondent's motions and requests described above on grounds specified in the record. A copy of pages 1 through 6 of the transcript of the December 6 proceeding showing disposition of such motions and requests is appended hereto as Exhibit A.
Upon denial of the motions and requests I took Complainant's evidence pursuant to 952.11 of the Rules of Practice.
FINDINGS OF FACT
1. Based on the testimony of Postal Inspector Olin J. Broadwater and Complainant's Exhibits 1 through 6 I find that respondent is engaged in conducting a scheme or device for obtaining money or property through the mails.
2. In the wording of respondent's advertisements quoted in subparagraphs (a), (b), (c) and (d) of paragraph III of the complaint quoted above, I find representations made by respondent as to its product, the ENERGY PILL, substantially as characterized in the complaint.
3. According to its label the ENERGY PILL has the following contents (CX-5a):
"Each tablet contains: MDR
Vitamin A 5,000 USP Units 1 1/4
Vitamin D 400 USP Units 1
Vitamin B1 2 mg. 2
Vitamin B2 2.5 mg. 2
Vitamin C 50 mg. 1 2/3
Vitamin B6 1 mg. *
Vitamin B12 1 mcg. *
Niacinamide 20 mg. 2
Pantothenic Acid 1 mg. **
Iron 15 mg."
4. Vincent F. Cordaro, a doctor of medicine employed by the Food and Drug Administration and qualified to express opinions concerning the efficacy of the product involved (CX-7, Tr. 14, 15), testified for Complainant. According to Dr. Cordaro, the ingredients of the product, are present in adequate quantities in the diet of the average person. I conclude from his testimony (Tr. 16-21) that the ingredients of the ENERGY PILL taken individually or in combination, will not effect the results represented in respondent's advertising.
5. Dr. Cordaro's opinions as to the efficacy of the product are in conformity with the consensus of informed medical opinion (Tr. 21).
CONCLUSIONS OF LAW
1. The meaning to be ascribed to an advertisement is based on its totality and its probable effect on the ordinary mind. See Donaldson v. Read Magazine , 333 U.S. 178, 189 (1948). In judging the meaning of an advertisement, that which is implied must be considered as well as that which is expressly stated. Aronberg v. F.T.C. , 132 F.2d 165 (7th Cir. 1943); Cates v. Haderlein , 189 F.2d 369 (7th Cir. 1951). Applying these principles to the advertisements of respondent involved in this proceeding, I find that they make representations substantially as characterized in the complaint.
2. Based on the testimony of Dr. Cordaro, I find that such representations are materially false in fact.
3. Respondent is engaged in conducting a scheme for obtaining money or property through the mails by means of representations materially false in fact in violation of 39 U.S.C. 3005.
4. The federal courts have upheld the constitutionality of 39 U.S.C. 3005 under attacks similar to those set forth in the answer. See, for example, Hollywood House International, Inc. v. Klassen , 508 F.2d 1276 (1974). Further, 39 C.F.R. 224.1(c)(5)(G)(iv) denies authority to Administrative Law Judges to determine the validity of Postal Service regulations.
5. An order pursuant to 39 U.S.C. 3005 in the form attached should be issued against respondent.