In the Matter of the Complaint Against

 STANDARD RESEARCH LABORATORIES
 Post Office Box 9547 at
 Fort Lauderdale, Florida 33310

 P.S. Docket No. 7/48;  
 
 04/04/80
 
 Cohen, James A.  

 APPEARANCE FOR COMPLAINANT:
 ThomasA. Ziebarth, Esq.
 Consumer Protection Division
 Law Department
 475 L'Enfant Plaza, S.W.
 U. S. Postal Service
 Washington, DC 20260

 APPEARANCE FOR RESPONDENT:
 Christopher S. Barnard, Esq.
 Katz, Paller & Land Suite 2000
 470 East Paces Ferry Road
 Atlanta, GA 30305

Respondent has appealed from the Initial Decision of Administrative Law Judge Quentin E. Grant in which Judge Grant recommends the issuance of an order under 39 U.S.C. § 3005 based on his conclusion that Respondent by means of advertisements for its product "Biotin Solution Hair Restoration Gel" is engaged in a scheme for obtaining money through the mail by means of false representations.

On April 11, 1979, the Consumer Protection Division, Law Department United States Postal Service, filed a complaint alleging that Respondent is engaged in conducting a scheme for obtaining money through the mail in violation of 39 U.S.C. § 3005. Specifically the complaint alleges in paragraph 3 that by means of advertisements for its product "Biotin Solution Hair Restoration Gel" Respondent represents that:

"(a) Baldness and excessive hair loss is due to an accumulation of the hormone androgen (testosterone);

"(b) The use of BIOTIN SOLUTION HAIR RESTORATION GEL will combat testosterone buildup and enable hair to grow again;

"(c) The use of BIOTIN SOLUTION HAIR RESTORATION GEL will prevent excessive hair loss and baldness in 9 out of 10 cases; and

"(d) The use of BIOTIN SOLUTION HAIR RESTORATION GEL will reactivate dormant hair roots and cause hair to grow again."

The complaint further alleges that these representations are materially false.

By stipulation of the parties, paragraph 3 (a) of the complaint was dismissed and is no longer in dispute.

At the hearing held on the complaint each side presented the testimony of a medical doctor. Both sides also introduced various exhibits which they claim support their position.

Judge Grant found the evidence presented by the Postal Service persuasive and issued his decision holding that Complainant had established that Respondent makes the representations alleged in the complaint and that those representations are materially false and in violation of 39 U.S.C. § 3005. Respondent filed a timely appeal from that decision.

In its initial appeal brief (p 14) Respondent succinctly and correctly characterizes the heart of this matter as follows:

"This case obviously boiled down to a question of which expert to believe - Dr. Kramer or Dr. Lubowe? Since their testimony was diametrically opposed, Dr. Kramer stating that biotin cannot work, Dr. Lubowe stating it has worked and does work, the issue then became which testimony was entitled to the greater weight. More particularly, the issue became: was the evidence of Dr. Lubowe of sufficient quality and reliability to preclude a determination that, as against such evidence, the testimony of Dr. Kramer established by a preponderance that the three contested allegations were materially false as a matter of fact."

Respondent argues that in determining the weight to be given to conflicting expert testimony, consideration must be given to the expert witness' experience, knowledge, credentials, qualifications, related research projects and personal observations with regard to the subject matter of the testimony. Respondent cites numerous Federal Court decisions which address the essentials of expert testimony and then concludes:

"The logical extension of this reasoning would be that if expert testimony is not well-reasoned, is not based on what is known and uncontradicted by empirical evidence, then it cannot be considered as substantial evidence." (Res. Brief p. 15)

It also argues that in the case of conflicting expert testimony it is extremely difficult for a proponent to meet its burden of proof.

Complainant called Dr. Karl Jules Kramer, a medical doctor who received his A.B. in chemistry, summa cum laude, from Cornell University in 1965 and his M.D. from John Hopkins University in 1969. Dr. Kramer was licensed to practice in 1970 and was certified a diplomate of the American Board of Internal Medicine in 1973, a diplomate of the American Board of Dermatology in 1976 and a Fellow of the American Academy of Dermatology in 1976. Dr. Kramer has published several articles in various medical publications but has written no papers dealing with baldness or other hair conditions (Tr. 9, CX-7).

Dr. Kramer maintains a private practice in which he deals solely with dermatological problems. Five to ten percent of his patients come to him in connection with hair and baldness problems (Tr. 10). Dr. Kramer testified that he was aware of two doctors who use biotin products for treatment of baldness problems (Tr. 41). No responsible medical journal has published any test results supporting the use of biotin for baldness. If a product had been developed whichwould grow hair, through such publications, the medical profession would know about it (Tr. 31, 32, 113). Dr. Kramer stated that in his opinion Respondent's product would not achieve the results represented (Tr. 35, 37, 51, 71) and that his views were consistent with the consensus of medical opinion (Tr. 37, 41). His training and experience support the validity of that belief.

Respondent called Dr. Erwin I. Lubowe, a medical doctor who received his degree from the New York Medical College in 1930. Dr. Lubowe is a diplomate of the American Board of Dermatology and a fellow and member of numerous other medical associations and societies. Dr. Lubowe has written books and numerous articles, several of which deal with scalp and hair disorders (RX-1). Dr. Lubowe maintains a private practice. Thirty to forty percent of his patients come to see him in connection with hair and scalp problems (Tr. 79). On the basis of his pharmacological and dermatological background Dr. Lubowe had "a feeling" that the use of biotin gel would stop excessive hair loss (Tr. 90). However, although specifically and directly asked three different times, as to whether his views are consistent with the consensus of medical opinion, Dr. Lubowe avoided providing a direct or responsive answer (Tr. 96, 97, 99-100). He acknowledged that no papers on the subject had been published by the medical profession and that he did not know what the average physician thinks in this regard (Tr. 100, 113).

Respondent's witness, Dr. Lubowe possesses more experience, has been involved in more activities and has written extensively on subjects directly related to the issues at hand. Respondent argues that Dr. Lubowe's testimony, therefore, is more valuable, substantiated, and credible and therefore entitled to greater weight. However, such experience does not automatically provide superior knowledge and, except for the ultimate question, Respondent's witness identified no errors or inadequacies in Dr. Kramer's testimony and made no attempt to challenge Dr. Kramer's representation that his (Dr. Kramer's) opinion was in accord with the consensus of medical opinion.

It is concluded that the evidence presented by the Postal Service, i.e. that Respondent's product will not perform as represented, is consistent with and supported by the consensus of the medical profession.

Respondent presented no evidence with regard to the actual use of its product Biotin Solution Hair Restoration Gel. Through the testimony of Dr. Lubowe Respondent did present evidence of two studies which involved the use of compounds similar in formulation which, according to Dr. Lubowe's "thought and prophesy", would have the same effect (Tr. 92).

Dr. Lubowe first learned about the use of biotin for the treatment of male pattern baldness from a paper given by a Dr. Settel at the American Academy of Family Physicians (Tr. 81). A document which Dr. Lubowe identified as a copy of the paper delivered by Dr. Settel was received as Respondent's Exhibit No. 3 (Tr. 87). That Exhibit is a reprint from the October 1977 edition of "Drug and Cosmetic Industry". The reprint states that it was "Presented at the Scientific Assembly of the American Academy of Family Physicians in Boston in October 1976". Respondent's Exhibit 3 provides general data concerning two studies, one of which included the use of a biotin compound applied daily in conjunction with a shampoo used three times weekly. The paper states that data on the biotin study was incomplete. It does not identify the author and, in the opinion of Dr. Kramer, is not one which would be accepted in the medical community. Dr. Kramer characterized the paper as being "kind of interesting but it really doesn't prove anything" (Tr. 123).

Dr. Lubowe stated that 350 dermatological centers have been using Dr. Settel's formula for a number of years (Tr. 100). However, no details or specifics concerning these centers were provided.

Dr. Lubowe also described a test he conducted with a biotin gel formulated by him and used by three hundred of his patients (Tr. 82). In conjunction with his study Dr. Lubowe had his patients go on a low fat diet, use a protein shampoo and supplement their diet with a B complex vitamin (Tr. 82). He observed a significant reduction in hair loss in the persons following his program and had "a feeling" that the reduction in hair loss was due to the biotin gel (Tr. 89, 90).

In summary, the evidence presented by Respondent in its attempt to negate the consensus of medical opinion concerning the effect on hair loss of biotin compounds primarily consists of generalized representations made by Respondent's medical witness and an unsigned article printed in a publication of the drug and cosmetic industry. Although Respondent represents that hundreds of people have successfully been treated with products similar to Respondent's product the evidence in this regard is not persuasive. Accordingly, it was not improper for the Administrative Law Judge to conclude that the Complainant's evidence was reliable and credible and constituted a preponderance of the evidence.

In its "Additional Brief On Appeal" (pp. 1, 2) Respondent specifically attacks that portion of Complainant's reply memorandum (p. 6) in which Complainant states:

"While Complainant has the ultimate sic of proof in proceedings under 39 U.S.C. § 3005 the burden of going forward can, and in this case did, shift to Respondent. In order toovercome such proof of the consensus of informed medical opinion, it would be necessary for Respondent to show, by means of valid, well-designed scientific studies that the consensus was somehow incorrect. This Respondent admittedly has not done."

Respondent attacks Complainant's position stating:

"No statutory, decisional, or regulatory authority is cited in support of this novel and not inconsequential position. Nor could there be, for there is no authority for such a proposition."

Respondent argues that the Complainant has the burden of proving its case and that it must do so by a preponderance of the evidence. Respondent acknowledges that the burden of going forward may shift after a prima facie case has been established but notes that such a shift will not relieve Complainat of its ultimate burden of persuasion. Respondent also argues that Judge Grant appears to have held it to a higher standard of proof than he required of the Postal Service. Respondent considers that the presiding Judge accepted the Postal Service's opinion evidence without further support but indicated that to be credible the evidence of Respondent should be supported by a double blind test or other equally persuasive laboratory data.

Well established, but frequently overlooked, decisions and evidentiary writings have held that the rules of evidence do not place on a litigant the burden of establishing negative or other facts peculiarly within the knowledge of its adversary. In United States v. Denver & Rio Grande R.R. Co., 191 U.S. 84, 92 (1903) the Supreme Court stated:

"It is a general rule of evidence, noticed by the elementary writers upon that subject, 1 Greenl. Ev. sec. 79, 'that where the subject matter of a negative averment lies peculiarly within the knowledge of the other party, the averment is taken as true unless disproved by that party.' When a negative is averred in pleading, or plaintiff's case depends upon the establishment of a negative, and the means of proving the fact are equally within the control of each party, then the burden of proof is upon the party averring the negative; but when the opposite party must, from the nature of the case, himself be in possession of full and plenary proof to disprove the negative averment, and the other party is not in possession of such proof, then it is manifestly just and reasonable that the party which is in possession of the proof should be required to adduce it; or, upon his failure to do so, we must presume it does not exist, which of itself establishes a negative. Great Western R. R. Co. v. Bacon, 30 Illinois, 347; King v. Turner, 5 M.&S. 206. Familiar instances of this are where persons are prosecuted for doing a business, such, for instance, as selling liquor without a license. It might be extremely difficult for the prosecution in this class of cases to show that the defendant had not the license required, whereas the latter may prove it wihtout the slightest difficulty. In such case the law casts upon the defendant not only the burden of producing his license, but of showing that it was broad enough to authorize the acts complained of. Commonwealth v. Rafferty, 133 Massachusetts, 574; Commonwealth v. Towle, 138 Massachusetts, 490." (emphasis added)

The evidentiary rule expressed above has been consistently followed over the years. Selma Rome & Dalton R.R. Co. v. United States, 139 U.S. 560, 567 (1891); United States v. New York, New Haven & Hartford R.R. Co., 355 U.S. 253, 256 Note 5 (1957); Campbell v. United States, 365 U.S. 85, 96 (1961); Allstate Finance Corporation v. Zimmerman, 330 F.2d 740, 744 (5th Cir. 1964); Nader v. Allegheny Airlines, Inc., 512 F.2d 527, 538 (DC Cir. 1975) reversed on other grounds, 426 U.S. 290 (1976); Kurzon v. United States Postal Service, 539 F.2d 788, 795 (1st Cir. 1976) 1 S. Gard, Jones on Evidence, ??5.8, 5.9 (6 Ed. 1972) IX Wigmore on Evidence § 2486 (3 Ed. 1940), 31A CJS § 113.

It is apparent that it is equally within the ability of the parties to establish the consensus of medical opinion with regard to any particular medical matter. However, when an organization makes representations concerning a product and those representations are not in accord with the consensus of authority, it is only reasonable to expect that organization to have data which will adequately support such representations. Accordingly, if Respondent takes the position that the medical consensus is incorrect because of new or recent developments which have not been reported in reliable medical literature and received acceptance by a significant body of the medical community, it cannot merely allege or present limited evidence concerning the existence of such developments and, in effect, challenge the Postal Service to prove it isn't so (e.g. see p.p. 11, 13, 20, 22 of Respondent's Appeal Brief where Respondent cites the absence of tests proving that its product will not perform as represented). It is incumbent on Respondent to present persuasive evidence in support of that position. If it does not do so, it may properly be concluded that such evidence does not exist.

The Postal Service has the burden of establishing a prima facie case and the ultimate burden of persuasion. It must prove its case by a preponderance of the evidence, not the "clear and convincing" or "beyond reasonable doubt" evidentiarystandards applicable in other types of proceedings. Michigan Bulb Co., P.S. Docket No. 7/43 (P.S.D. 1979). In this case the Postal Service has established its prima facie case by the opinion testimony of Dr. Kramer and his testimony that a consensus of the medical profession believes that products like Respondent's will not have an effect on hair loss or growth. The evidence presented by Respondent with regard to possible beneficial effects of biotin products falls short of constituting a preponderance of the evidence and therefore does not warrant a conclusion that the Postal Service has failed to satisfy its ultimate burden of persuasion.

In its appeal brief Respondent sets forth 18 claimed errors in the Initial Decision. Alleged errors 3 through 12 and 14 through 18 all relate to the testimony of the two experts, the weight to be given to such testimony, the burden of proof and evidentiary standards. The discussion above, on the basic issue and burden of proof, addresses these allegations and they are found to be without merit.

Respondent's first enumeration of error challenges the finding that Respondent is engaged ina "scheme or device" for obtaining monies through the mail. Respondent argues that it is engaged in a normal business activity which is neither a scheme nor device "which terms carry negative and fraudulent implications". As used in the statute the terminology "scheme or device" applies to innocent as well as intentional misrepresentations. Kurzon v. United States Postal Service, 539 F.2d 788, 795 (1st Cir. 1976); United States v.

International Term Papers Inc., 477 F.2d 1277, 1280 (1973). A scheme or device exists if a business seeks remittances of money through the mail by means of a plan or program involving a misrepresentation. See Karfax & Karfax Industries, P.S. Docket No. 7/36 (P.S.D. 1979). Respondent's first enumeration of error is without merit.

Respondent's second enumeration of erro rchallenges Judge Grant's finding that the representations cited in the complaint were "expressly" made. The term "expressly" may reasonably be interpreted to mean explicit, definite or specific. Respondent correctly points out that some of the claimed representations, (e.g. that Respondent's product will prevent baldness) were not specifically made and that the finding apparently involved the Judge's personal analysis and interpretation of the language. The Judge's choice of words was unfortunate. However, the language of the advertisements was clearly intended to, and does in fact, convey the representations cited in the complaint. Therefore, although technically correct, Respondent's exception has no effect on the result reached.

Respondent's enumeration of error thirteen is closely related to No. 2. Respondent cites the absence of any evidence whatsoever as to the effect of the advertisements on the ordinary mind or that the representations made were material. This enumeration of error is also without merit. A Judge is qualified to determine the effect of various representations on the minds of ordinarymen and whether suchrepresentations are material. Vibra-Brush v. Schaffer, 152 F. Supp. 461, 468 (S.D. N.Y., 1957) reversed on other grounds, 256 F.2d 681, (2d Cir. 1957); Baslee Products Corp. v. United States Postal Service, 356 F. Supp. 841, 847-848 (D. N.J. 1973) Davinol Products, P.S. Docket No. 7/22 (P.S.D. 1979), and cases cited therein.

After consideration of the entire record and Respondent's enumerations of error, it is concluded that Respondent is engaged in a scheme for obtaining money through the mail by means of materially false representations. Accordingly, Respondent's appeal is denied and a remedial order under 39 U.S.C § 3005 is being issued contemporaneously with this decision. However, pursuant to the request set forth in Respondent's appeal brief, the return portion of the order is being stayed for a period of 21 days in which Respondent may seek Judicial Review.