In the Matter of the Complaint Against NEW GENERATION CALIFORNIA PACIFIC RESEARCH, INC. Post Office Box 22759 at Sacramento, CA 95822 and Post Office Box 2570 at Sparks, NV 89431 P.S. Docket No. 11/152 04/09/82 Grant, Quentin E. APPEARANCES FOR COMPLAINANT: Thomas A. Ziebarth, Esq. Maureen C. Lindsey, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260 APPEARANCE FOR RESPONDENT: Jay Geller, Esq. Geller & Bozeman 2049 Century Park East Suite 1200 Los Angeles, CA 90067
The Complaint filed herein charges that Respondent is in violation of 39 U.S.C. § 3005 in connection with the sale of certain hair products. The Complaint specifically alleges that Respondent violates the statute by selling these products - NEW GENERATION HAIR AND SCALP CLEANSER and NEW GENERATION SHAMPOO - through the mails by means of materially false representations, made in advertising and promotional material that:
"a. NEW GENERATION HAIR AND SCALP CLEANSER and NEW GENERATION SHAMPOO will stop hair loss in balding men; and
b. NEW GENERATION CLEANSER AND SHAMPOO will cause the regrowth of hair on bald heads; and
c. NEW GENERATION CLEANSER AND SHAMPOO will strengthen and thicken new hair as it grows back on bald heads."
Respondent's Answer denied all allegations of the Complaint.
A hearing was held in San Francisco, California, and several evidentiary depositions and affidavits were thereafter taken and filed.
The parties have filed proposed findings of fact, conclusions of law, briefs, and reply briefs, all of which have been considered in arriving at this decision. To the extent indicated proposed findings and conclusions have been adopted. Otherwise they have been rejected as irrelevant, immaterial, or not supported by the evidence.
1. Respondent, California Pacific Research, Inc., is a Nevada corporation, a mail order business, that sells through the mails NEW GENERATION HAIR SCALP CLEANSER and NEW GENERATION SHAMPOO, the products involved in this proceeding (Stipulations 1-5; CX-2a-2e, 3a, 3b; Tr. 159). Respondent seeks remittances of money for such products through the mails (CX-2c, 3e).
2. Respondent initially attracts attention to these products by means of the following newspaper advertisement (CX-1):
BALDING?
maybe NEW GENERATION has the answer for you] If you missed our Sacramento Bee & Union articles regarding male pattern baldness, we will be more than happy to mail copies to you. Please send a self-addressed envelope to:
New Generation
P. O. Box 22759-F
Sacramento, CA 95822
or call 456-2781
We offer a complete unconditional money back guarantee if you are not satisfied for any reason. Please watch for our message on Channels 13 and 40 during the month of August. Be sure to watch an upcoming PM Magazine feature on our successful approach to hair restoration.
3. Persons responding to this advertisement receive from Respondent reprints of articles concerning Respondent and the products involved which appeared in The Sacramento Bee, The Sacramento Union, and the Suttertown News, together with an advertisement headed "RESULTS, SO FAR, OF OUR CONTINUING HAIR IMPROVEMENT PROGRAM" and an attached order blank for the products (CX-2(a), (b), (c), 3(d), p. two). These advertising materials are reproduced below.
4. In furnishing the above article excerpts to persons inquiring about the New Generation produces, Respondent adopted them as promotional material for the sale of such products (Tr. 178).
5. Respondent's president, Robert E. Murphy, Jr., testified that Respondent represents in its advertising and promotional material that a certain percentage of users with male pattern baldness (MPB) would experience less hair fallout and would possibly revert to a state of normal fallout. He denied that Respondent makes any representation that the products will stop hair loss or cause regrowth of hair on bald heads or will strengthen and thicken new hair as it grows back on bald heads (Tr. l83, 184).
6. Carol A. Scott, Ph.D., an associate professor of marketing at the Graduate School of Management, University of California at Los Angeles testified for Respondent as an expert in the interpre tation of advertising. According to Dr. Scott on her direct examination, Respondent's advertising is directed at an audience with a balding problem; it is uniformly optimistic but very cautious (Tr. 309(; its information would be processed very carefully by bald or balding men; it is relatively unpersuasive (Tr. 326); and neither individually, nor in combination, do the various advertising and promotional items make the representations alleged in the Complaint (Tr. 310-331).
7. On cross-examination Dr. Scott said that her negative answers on direct examination to questions as to whether Respondent makes the representations alleged in the Complaint meant that she would not interpret the advertising and promotional material as saying that all users would get the results (Tr. 336, 346). She stated that an interested reader would interpret the "RESULTS, SO FAR, ***" part of the advertising, supra (CX-2(c), 3(d), p. 3) as representing that 80% of users have experienced regrowth of hair and that 100% have stopped abnormal hair fallout (Tr. 344, 345) and that i would encourage such readers to order the product on the strength of the hope that they would be lucky enough to be among the 80% who have experienced regrowth of hair (Tr. 344).
8. Dr. Scott acknowledged that inclusion of negative or skeptical reports in Respondent's promotional material could reinforce the positive messages therein by adding credibility (Tr. 347-349).
9. As of the time of the hearing Respondent has received about 6,000 orders for the products (Tr. 332) and about 470 requests for refund (Tr. 181).
10. In late l979 and early 1980 Mr. Murphy conducted a non scientific study of the products involving 50 or 60 people. The results of this study as self-reported by participants are the basis for the percentages of success in stopping excessive hair loss and producing new hair growth set forth in Respondent's advertising material (Tr. 201, 206; CX-2(c)). Respondent did not keep careful records of the study. Mr. Murphy tried to get as many people with creditable reputations as possible to say that the product worked (Tr. 206).
11. A total of 17 users of the product, not counting Mr. Murphy, testified at the hearing, or by deposition, concerning results obtained by using Respondent's products. Sixteen of the 17 reported the halting of excessive hair loss, regrowth of hair, strengthening and thickening of new hair, or all of such results. These user witnesses represented a broad cross-section of profes sions and occupations, from physicians and dentists, to lawyers, bankers, media personalities, government officials, law enforce ment officials, and businessmen.
12. Kark Jules Kramer, M.D., testified for Complainant. Dr. Kramer is board-certified in both internal medicine and dermatology. He is engaged in the private practice of dermatology in Miami, Florida. He keeps current in that field by reading medical journals, attending seminars and meetings concerned with his specialty, and, as a member of the staff of Jackson Memorial Hospital, attending weekly meetings. In this practice, Dr. Kramer deals with patients complaining of hair and scalp disorders. His professional experience and knowledge qualifies him to describe the elements of a valid scientific study, including the design and conduct thereof (Tr. 13-17; CX-6).
13. Based on Dr. Kramer's testimony I find as follows:
Human Fair is dead, or inert, material composed primarily of protein. The living part of the hair is called the hair follicle. Hair follicles of scalp hair go through the following cycle:
(a) the anagen, or growth, phase lasting approximately four years; (b) the catagen phase, a short period during which the follicle grows smaller; (c) the telogen, or resting, phase, lasting about four months, during which the hair rests, i.e., the hair follicle doses grow but the hair remains in the scalp; (d) return to the growth phase, the old hair falling out as the new hair grows.
The human scalp is continuously producing new hairs and hairs are continuously being shed. Taking the average person, approxi mately 85% of the hair follicles are growing at any one time and 15% are resting. Average loss is between 50 and 100 hairs per day (Tr. 18, 19).
Male pattern baldness (MPB) is the most common cause of excessive hair loss and the appearance of baldness (no visible hairs on the scalp). It occurs in upwards of 80% of men by the time they reach 60 or 70 years and may begin before the age of 20.
Hereditary (genetic) predisposition together with hormonal influences are the major causes of MPB. The hair follicles that are genetically predetermined to be lost change testosterone from the bloodstream into another hormone called dihydrotestosterone (DHT). Over a period of time DHT destroys the hair follicle.
MPB does not produce total hair loss over the entire scalp. A fringe of hair invariably remains in the back, the hair follicles in that area not having the capacity to change testosterone into the follicle-destructive DHT.
Dirty scalps are not a cause of MPB (Tr. 152).
14. NEW GENERATION HAIR AND SCALP CLEANSER (hereinafter referred to as the cleanser) is composed of purified water and Polysorbate 60 (CX-5). Polysorbate 60 is used primarily as an emulsifier in products designed to remove oils or oily materials (Tr. 37).
15. NEW GENERATION SHAMPOO (hereinafter referred to as the shampoo) has the following ingredients: purified water, Amphoteric-2, Cocamido DEA, Cocamido-propyl Betaine, Citric Acid, Methyl Paraben, and Propyl Paraben (CX-4).
Amphoteric-2 is widely used in shampoos as an electrically neutral chemical. Cocamido DEA, widely used in the cosmetics industry, is a derivative of coconut oil and has an oily consis tency. Cocamido-propyl betaine is a similar derivative of coconut oil and is also contained in many shampoos. Citric acid is generally sued as preservative in cosmetic products. Methyl paraben and propyl paraben are also used as preservatives. All of these ingredients, or closely related chemicals, are commonly used in widely available shampoos (Tr. 35, 36).
16. Dr. Kramer's opinion, conforming to the informed medical consensus, is that neither Polysorbate 60 (the active ingredient of the cleanser) nor the shampoo, nor the two products used together, will prevent excessive hair loss or cause new growth of hair on bald scalps (Tr. 45, 46, 63, 64, 66). Dr. Kramer's research did not reveal any contrary opinion supported by valid scientific studies (controlled, double-blind) such as would be required to substanti ate the efficacy of the products to stop excessive hair loss and cause regrowth of hair (Tr. 38-45).
17. Cholesterol is a building block of steroid hormones, including testosterone but the only glands in the body able to make testosterone from cholesterol are the testes and the adrenal glands (Tr. 120). It is possible that polysorbate 60 will remove cholesterol from the scalp (Tr. 143), but since cholesterol is not converted to testosterone in the scalp its removal is not related to MPB (Tr. 118-120).
18. It is a general principle in medicine that it it is suggested to a patient that a preparation will produce in him a certain result, even if the preparation has no real pharmacologic effect, it is more likely that such result will be achieved than if that suggestion has not been made. This is known as the placebo effect (Tr. 49, 50). It was suggested to the users of Respondent's products who gave evidence in this matter that use of the products would result in reduced hair loss and growth of new hair.
19. Results of the use of a preparation self-reported by patients, or users, are not accorded validity in the scientific community (Tr. 51). The results of the use of Respondent's pro ducts introduced in evidence through user-witnesses were self reported. Photographs introduced in support of the testimony of such witnesses were subject to too many variables, such as dif ferences in lighting and differences in combing, to furnish persuasive support for the testimony although some photographs appear to show more hair after, than before, use of the products (Tr. 207-209).
1. The meaning of advertising representations is to be judged from a consideration of an advertisement in its totality and the impression it would most probably create in ordinary minds. Donaldson v. Read Magazine, 333 U. S. 178 (l948); Vibra-Brush Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957); Borg-Johnson Elec tronics v. Christenberry, 169 F. Supp. 746 (S.D.N.Y. 1959). Express representations are not required. It is the net impression which the advertisement is likely to make upon purchasers to whom it is directed which is important, and even if an advertisement is so worded as not to make an express representation, if it is artfully designed to mislead those responding to it the mail fraud statutes are applicable. G. J. Howard v. Cassidy, 162 F. Supp. 568. See also Virginia State Board of Pharmacy v. Virginia Citizens Council, 425 U. S. 748 (1976).
The ultimate impression on the reader results not only from what is stated but also from what is reasonably implied therefrom. Vibra-Brush Corp. v. Schaffer, supra; Aronberg v. Federal Trade Com mission, 132 F.2d 165 (7th Cir. l942).
2. (a) Applying the foregoing principles to Respondent's advertising and promotional material, I find that Respondent makes the representation that New Generation Scalp Cleanser and Shampoo will cause regrowth of hair on bald heads. This is so obviously the main thrust of such material that it requires no detailed dis cussion. The text is cleverly laced with notes of skepticism and reports of isolated failures, but I find their tendency to be the enhancement of credibility for the affirmative statements of efficacy of the product to grow hair.
This representation is material in that its obvious effect is to influence readers to purchase the product.
(b) I do not find that Respondent's advertising and promotional material makes in any serious or material manner the other representations alleged in the Complaint. There is only one mention of a user experiencing the strengthening and thickening of new hair, the emphasis being on the new hair. With respect to loss of hair the representation is that the product will stop excessive loss of hair, not that it will stop hair loss as alleged in the Complaint. There was no motion by Complainant to conform pleadings to proof. I do not consider it fair and appropriate to amend the Complaint at this juncture.
3. Neither expert nor lay testimony is required to interpret advertisements in proceedings under 39 U.S.C. § 3005. Vibra-Brush v. Schaffer, supra. The record here is replete with both kinds of such testimony. Insofar as that testimony was to the effect that Respondent's advertising and promotional materials do not make the representation found above, I reject it as flying in the face of the obvious express and implied thrust of such materials, the fact that Respondent has received at least 6,000 orders for the products, and also as contrary to plain common sense. Even Respondent's expert,
Dr. Scott, acknowledged on cross-examination that interested readers of such material would interpret it to mean that large percentages of users had experienced regrowth of hair (80%) and cessation of abnornal hair fallout (1100%) and would be encouraged to order the products on the strength of the hope that they would be among the lucky ones. She also made the significant acknowledgement that the negative, or skeptical, content of the material could reinforce the positive message by adding credibility thereto.
Respondent says that Vibra-Brush, supra, was reversed by the Circuit Court of Appeals (256 F.2d 681) and, therefore, cannot be relied on as support for discounting lay and expert testimony on interpretation. The decision was not reversed. It was withdrawn by the higher court on a technicality having no relationship to the points for which the District Court decision is repeatedly cited.
4. Based on the testimony and opinions of Complainant's medical expert witness, Dr. Kramer, conforming to the informed medical con sensus, I find that the representation made by Respondent as to regrowth of hair on bald heads is false in fact.
Dr. Kramer was well-qualified by education, experience, and continuing awareness of relevant, current medical and scientific literature and thinking to express such opinions. It is reasonable to assume that a scientifically valid study showing that topical application of polysorbate 60 to bald or balding male scalps will cause regrowth of hair would be widely reported in reputable pro fessional journals. Evidence of such a study has not been shown to exist. The Setala-Schreck Purola study (CX-7) relied on by Respon dent, did not involve the same combination of ingredients as the products in question here. Therefore, I can attach no materiality or weight to it. Further, there is no scientifically valid support for its underlying theory that cholesterol is converted in the scalp to testosterone.
5. Expert opinion testimony need not be based upon tests of the particular product in issue to constitute sufficient evidence of false advertising representations. Reilly v. Pinkus, 338 U.S. 269, 274 (l949); Original Cosmetics Products, Inc. v. Strachan, 459 F. Supp. 496 (S.D.N.Y. l978), aff'd. 603 F.2d 214, Table, (2nd Cir. l979), cert. den., 444 U.S. 915 (1979); Skinny Suit, P.S. Docket No. 3/44 (P.S. Dec., 2/19//76, p. 6).
6. A finding of falsity can be based on the testimony of an expert witness whose testimony is in accord with the consensus of informed medical or scientific opinion when there is no contradic tory evidence which is said to be in accord with such a consensus of opinion. Athen Products, Ltd., P.S. Docket No. 7/99 (P.S. Dec., 6/26/81, p. 33); Standard Research, P.S. Docket No. 7/78 (Initial Decision, December 18, l979); Standard Research, P.S. Docket No. 7/48 (Initial Decision, August 31, l979); Modern Age Products, Inc., P.S. Docket No. 5/102 (P.S. Dec., June 29, l977; Initial Decision, April 6, l977); Nutrient Laboratories, P.S. Docket No. 5/48 (Initial Decision, November 17, l976).
There is no such contradictory evidence in the record of this case.
7. Respondent says that knowledge in the field of dermatology concerning the mechanism of hair loss in male pattern baldness and how hormones actually affect hair follicles has not been "crystallized in the crucible of experience" and that in these circumstances representations in Respondent's promotional material cannot be found false, citing American School of Magnetic Healing v. McAnnulty, 187 U.S. 94 (1902); Reilly v. Pinkus, 338 U.S. 269, 274 (l949); Original Cosmetics Products, Inc. v. Strachan, supra. As interpreted in Reilly v. Pinkus, supra, McAnnulty set aside a postal fraud order pointing out that there were two widely held schools of opinion as to whether the mind could affect bodily diseases, and that scientific knowledge had not advanced to the point where an actual intent to deceive could be attributed to one who asserted either opinion. Thus there was "no exact standard of absolute truth by which to prove the assertion false and a fraud." At best, testi mony either way was held to be no more than "opinion" in a field where imperfect knowledge made proof "as of an ordinary fact" impossible.
The instant case bears no resemblance to McAnnulty. There are not at the present time, and consequently, here are not reflected in this record, two widely held schools of opinions as to whether a scalp product, such as Respondent's, containing polysorbate 60 will cause regrowth of hair. Only one real school of opinion - the medical consensus established through Dr. Kramer - has been shown here. The linchpin of that consensus is that cholesterol is not converted in the scalp to testosterone. Therefore, removal of cholesterol from the scalp by polysorbate 60 has no influence on hair fallout or regrowth. It follows that McAnnulty and the other cases cited by Respondent do not require rejection of Dr. Kramer's opinion or evidence of testing of the product by Dr. Kramer.
8. Although the witness-users of Respondent's product who testified at the hearing appeared to be honest and attempting to tell the truth, their accounts were purely anecdotal, nor rising to the level of valid, scientific proof for the important claim at issue. The "before and after" photographs are not conclusive because of variables involved, such as lighting and combing. Their claimed use of the product was not scientifically supervised. No accurate records thereof were maintained. There was no controls established. The results they reported were consistent with a possible placebo effect, particularly since they were told before use of the product that it might produce new growth.
9. The fact that the placebo effect may occur in the case of some users does not support the efficacy of the product or the truthfulness of Respondent's representations. Stauffer Laborato ries v. F.T.C., 343 F.2d 75 (9th Cir. l965); Original Cosmetics Products, Inc. v. Strachan, supra; Wilmont Products, P.S. Docket No. 6/46 (P.S. Dec., l979).
10. The testimony of Dr. Ballard, Respondent's expert in pharmacy and pharmaceutics, fell far short of establishing the efficacy of Respondent's product to achieve the results represented or of effectively countering Dr. Kramer's opinions. Summed up, Dr. Ballard's testimony consisted principally of a theory (based on the Schreck-Purola 1976 study involving mice and not shown to have involved a preparation the same as Respondent's) that polysorbate 60 might be efficacious.
11. It may be that Respondent's product will produce the results represented. Dr. Kramer acknowledge this. But in the present state of medical and scientific knowledge there is no reliable support for such claim as to overcome the contrary consensus expressed by Dr. Kramer.
12. Disclaimers are ineffective to rebut misrepresentations. Gottlieb v. Schaffer, 141 F. Supp. 7 (l956); Cates v. Haderlein, 189 F.2d 369 (l951).
13. Respondent's offer of a refund to dissatisfied purchasers does not overcome the effects of making false representations. Borg-Johnson Electronics v. Christenberry, supra.
14. Respondent is engaged in a scheme to obtain money through the mail by means of materially false representations in violation of 39 U.S.C. § 3005. Accordingly, an order in the form attached should be issued against Respondent.