In the Matter of the Complaint Against COSVETIC LABORATORIES, et al. or any variation thereof at P.O. Boxes 95543, 95544 and 95545 Atlanta, GA 30347 etc. P.S. Docket No. 8/160; 12/22/82 Cohen, James A. APPEARANCES FOR COMPLAINANT: Sandra C. McFeeley, Esq. Thomas A. Ziebarth, Esq. Frederick I. Rosenberg, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260 APPEARANCE FOR RESPONDENT: Sheldon S. Lustigman, Esq. Bass, Ullman & Lustigman 747 Third Avenue New York, NY 10017
The Postal Service Decision in Cosvetic Laboratories, et al., P.S. Docket Nos. 8/160, et al., and cases consolidated therewith dated July 22, 1982, held, in part, that no False Representation Order would be issued with respect to certain Florida addresses used by Respondent. This holding was based on Complainant's admission that the solicitations which contain the Florida addresses do not include the representations set forth in the Complaints, and the absence of any showing that recipients of these solicitations would most probably be influenced by the representations determined to be false. Complainant has requested reconsideration of this portion of the decision, arguing that the solicitations seeking remittances to the Florida addresses are a continuation of the scheme alleged in the complaint and proved at the hearing to be false and that recipients of those solicitations were influenced to purchase Respondent's products by the previous false representations.
In its response to the Motion for Reconsideration, Respondent contends that Complainant has presented no new facts or legal arguments which would warrant reconsideration. It also argues that Complainant has not established either that solicitations to the Florida addresses include false representations or that recipients of these solicitations were induced to purchase Respondent's products by representations previously determined to be false. Finally, it contends that Complainant's attempt to prohibit truthful advertising is not authorized by 39 U.S.C. § 3005 and violates the first amendment.
Complainant's motion, in essence, argues that the Judicial Officer has overlooked or misapprehended facts in the record which support the issuance of a False Representation Order against the Florida addresses. While the motion relies exclusively on solicitations already in the record, it cites these solicitations with much greater particularity than previously. The record has been reviewed in light of Complainant's argument to determine whether the Judicial Officer overlooked or misapprehended facts which establish that readers of the advertisements seeking remittances to the Florida addresses would most probably be influenced by Respondent's false representations in determining whether to order Respondent's products. Cf. Federal Rule of Appellate Procedure 40.
In a decision involving the same Respondent, it was held that where a solicitation does not include representations previously found to be false, it "is not alone sufficient to establish that persons receiving the solicitation will purchase the product on the basis of their recollections of claims previously made." Cosvetic Laboratories, P.S. Docket No. 7/38 (P.S.D. on Petition for Supplemental Order and Motion for Modification, Aug. 21, 1980, at 5), recon. denied, Dec. 9, 1980. However, that decision did not hold that previously made claims can never serve as a basis for the issuance of a False Representation Order. See Cosvetic Laboratories, supra, on Motion for Recon. at 2 (P.S.D. Dec. 9, 1980); Raymond Milo, P.S. Docket No. 12/168 (P.S.D. on Motion for Clarification of Amendment to False Representation Order, July 16, 1982). Where false claims influence the decision to purchase a product, a False Representation Order against an address at which remittances for the product are sought may be appropriate even though the claims are not made in the advertisements seeking orders to that address.
Applying these principles to the present case, it is concluded that the record warrants issuance of a False Representation Order against Florida addresses included in certain solicitations as discussed below.
1. Bio-Genesis
Complainant cites advertisements appearing in the January, February and March 1981 issues of Respondent's magazine Body Forum 1/, and various direct mail circulars to support its contention that a False Representation Order should be issued with respect to the product Bio-Genesis. The Body Forum advertisements consist solely of a photograph of the product and an order form to one of the Florida addresses. Complainant argues: "Consideration must be given to what else, if anything, a reader of that advertisement may know about the product offered. The advertisement on its face asks for about $25 for a one-ounce eye dropper bottle of something called 'Bio-Genesis.' It would be a fantasy on the merchant's part to believe anyone would send that much money for a tiny quantity of a product he knew nothing about" (Comp. Motion p. 5).
A review of Respondent's magazines discloses that, in addition to these advertisements, the January and February 1981 issues of Body Forum also solicit memberships in a "Bio-Genesis Club" (p. 26A of both issues) which is represented as "The total in home system for hair care and hair restoration" (emphasis added). The advertisements, which list a toll-free telephone number for orders but include no mailing addresses, state that "These plans which include Bio-Genesis, Bio-Genesis Shampoo, and Bio-NC 36 feature the most up-to-date and effective treatment for male pattern baldness and excessive hair loss ever developed]" The representations that Bio-Genesis is effective in the treatment of male pattern baldness and excessive hair loss were previously determined to be false 2/ (I.D. pp. 14-16, 108; P.S.D. p. 11). The existence of a solicitation for telephone orders with false representations in the same magazine as a solicitation for mail orders without representations, but for the same product, establishes a continuing scheme which would most probably influence the purchase of the product. Further, where, as here, the false representations have been made to subscribers of the publication over a period of time, the subscribers would most probably be influenced by the prior representations (see appendix to motion, generally).
Accordingly, the record supports the issuance of a False Representation Order against the Florida addresses listed in advertisements and order forms for Bio-Genesis appearing in the January-March 1981 issues of Body Forum. A False Representation Order is also warranted against the additional Florida address included in direct mail solicitations DM 78, 80 and 81, which solicited orders for Bio-Genesis and were received by customers in February 1981. 3/ These direct mailings were sent to subscribers of Body Forum (see appendix to motion, generally) who, as previously discussed, would most probably be influenced by the representations contained in the February 1981 and prior issues of the magazine. Moreover, DM 80 itself contained the representation that Bio-Genesis was "the superstar of treatments for thinning hair. . ." (Flynn Afft., Exs. 6, 15 and 16) which, in effect, has previously been determined to be false (I.D. pp. 14-16, 108; P.S.D. p. 11).
2. Bio-Genesis Shampoo
Similarly, a False Representation Order is warranted for the Florida addresses used in soliciting orders for Bio-Genesis Shampoo in the February and March 1981 issues of Body Forum, since this product was part of the plan described in the "Bio-Genesis Club" solicitations for telephone orders in the January and February 1981 issues. Moreover, the March 1981 issue's advertisement for "Bio-Genesis Shampoo and Conditioner" (back cover) represents that these products are "for those people who are concerned about thinning, fragile hair" and shows, in full view, a bottle labeled Bio-Genesis "Hair Restorative Conditioner." The representations that Bio-Genesis Shampoo can affect hair loss and restoration were previously determined to be false (I.D., pp. 16, 108; P.S.D. p. 11). Thus, the ordinary reader most probably would be influenced to purchase the product by the prior and continuing false representations. A False Representation Order is also warranted against the Florida address included in DM 78 and 80, supra, which solicited orders for this product from Body Forum subscribers in February 1981, since recipients of these direct mailings would most probably be influenced by the Body Forum advertisements.
3. Jojoba Oil
The record also supports issuance of a False Representation Order for the Florida address listed in the advertisement for Jojoba Oil in the January 1981 issue of Body Forum (P. 17). While this advertisement only represents the product as a "scalp cleanser and dandruff fighter," an article in the same issue of Body Forum states: "Excessive production of sebum leads to the buildup of crusts and scales that can inhibit hair growth and accelerate hair thinning and loss by clogging the hair follicles" (p. 16). " . . . Fortunately, jojoba oil can rid the scalp of the deleterious sebum encrustations that inhibit healthy hair growth . . . " (p. 24). The representation that sebum results in hair loss has been determined to be false (I.D., pp. 85, 108; P.S.D. p. 11).
The same Florida address is used in order forms for Jojoba Oil contained in the December 1980-March 1981 Body Forums (p. 26B of each issue). The March issue also includes an advertisement with another Florida address, which states only that this product stops dandruff (p. 49). The two month interval between the January and March issues is not sufficient to offset the continuing impact of the prior representations which were made in the same publication over a seventeen month period (see the various advertisements under CX-M). Therefore, the second address included in the March issue is also subject to a False Representation Order. These Florida addresses are also subject to a False Representation Order because they are included in several direct mail solicitations which advertise this product, and were received by Body Forum subscribers between November 1980 and February 1981 (Flynn Afft., Exs. 3-6 and 15). As previously stated, it is reasonably to conclude that recipients of the direct mail circulars would be influenced by prior and simultaneous false representations in Body Forum.
4. Biotein H-3 with Nucleic Acid
Complainant's argument with respect to Biotein H-3 with Nucleic Acid is similar to that for Bio-Genesis. Citing advertisements for this product in the February and March 1981 Body Forums which consist solely of a photograph and an order form to a Florida address, Complainant states that "Unless the reader was expected --indeed, depended on --already to know something about the product, a merchant would be foolish to ask him for $45 for a two-ounce jar of the product" (Comp. Motion 6).
The record reflects that Biotein H-3 with Nucleic Acid has not been falsely advertised in Body Forum since the December 1980 issue, which contained a "telephone" solicitation representing this product as preventing hair loss and promoting new hair growth (p. 40). However, in view of the history of false representations for this product spanning a sixteen month period (see the various advertisements under CX-H), a False Representation Order is justified for the Florida address included in the February 1981 advertisement (Body Forum, p. 47). Moreover, the same post office box number, under a different addressee, is included in DM 62, 67 and 69, which solicited orders for this product in November and December 1980. DM 69, received by customers in December 1980, states that this product "may stimulate a lot more than just hair follicles] . . . Why let thinning hair rob you of your good looks and sex appeal when there's something you can do about it?" (Flynn Afft., Ex. 5, p. 4). The representation that Biotein H-3 with Nucleic Acid stimulates hair follicles to grow new hair has previously been determined to be false (I.D. pp. 63, 108; P.S.D. p. 11).
The present record does not justify a presumption that readers of the March 1981 advertisement cited by Complainant, supra, would continue to be influenced by the December representations. Therefore, a False Representation Order will not be issued on the basis of the March advertisement. However, the same Florida post office box number specified in this advertisement (Body Forum, p. 21), but to another addressee, is also included in direct mailings DM 78 and 80, which solicited orders for this product from Body Forum customers in February 1981. Accordingly, a False Representation Order is still warranted against this address.
5. Improved Formula 40 and Formula 40
The February and March 1981 solicitations for "Improved Formula 40" (February Body Forum, p. 26B; March Body Forum, pp. 24 and 26B), the January 1981 solicitation for "Formula 40" (Body Forum, p. 17), and the direct mail solicitations for these products (DM 62, 67, 69, 78 and 80) do not justify issuing a False Representation Order for the Florida addresses specified. These solicitations only represent the products as temporary hair thickeners, which was not determined to be false (I.D. pp. 106-107). Moreover, the record does not establish, nor does Complainant argue, that the ordinary reader would be influenced to purchase these products by prior representations found to be false.
6. Bio-NC 36, LB-49 and German Hair Formula
Vitamins and Shampoo
None of the Body Forum advertisements for these products appear to solicit remittances to a Florida address. 4/ Rather, Florida addresses are included in certain direct mailings which solicited orders for the products from November 1980 through February 1981. The only direct mailing which falsely represents any of these products is DM 69, which states that a lack of nutrients "means that your hair may not be getting what it needs to be healthy, thick, and lustrous . . . Give your body . . . and hair, a chance at those nutrients. Use the hair technology. German Hair vitamins." (Flynn Afft., Ex. 5, p. 4). The representation that ingestion of German Hair Vitamins will make a significant contribution to growth of beautiful, healthy hair has been determined to be false (I.D., pp. 88, 108; P.S.D. p. 11). Accordingly, a False Representation Order is warranted against the Florida mailing address included in DM 69 with respect to solicitations for this product. The same address was also used in DM 62 and 67, which solicited orders for this product.
As previously discussed, during January and February 1981, Bio-NC 36 was being advertised in Body Forum as part of a treatment plan for male pattern baldness and excessive hair loss. The representations that Bio-NC 36 can affect hair loss and promote new hair growth have been determined to be false (I.D. pp. 59-60, 108; P.S.D. p. 11). Accordingly, a False Representation Order is warranted against the Florida addresses included in the other direct mailings which solicited orders for this product through February 1981 (DM 62, 67, 78 and 80).
Finally, with respect to LB-49, the latest advertisements cited by Respondent as falsely representing this product appear in the September and October 1980 issues of Body Forum (at pp. 21 and 37, respectively). These advertisements represent that LB-49 can reduce hair fall-out and regenerate new hair growth. Both representations were previously determined to be false (I.D. pp. 58-59, 108; P.S.D. p. 11). Because of the prior history of false representations for LB-49 starting in January 1980 (see CX-C), a False Representation Order is warranted against the Florida address included in direct mailing (DM 62, which solicited orders for this product in November 1980. (This same address was used in DM 67 to solicit orders for LB-49). However, no basis exists in the record for issuing a False Representation Order against the additional Florida address included in DM 78, which solicited orders for this product in February 1981.
Contrary to Respondent's arguments, the issuance of a False Representation Order in the instances discussed does not violate 39 U.S.C. § 3005 or the first amendment. The purpose of a False Representation Order is ". . . prevention of future injury to the public by denying the use of the mails to aid a . . . scheme." E.g., Donaldson v. Read Magazine, 333 U.S. 178, 184 (1948); Lynch v. Blount, 330 F. Supp. 689, 693 (S.D.N.Y. 1971) aff'd 404 U.S. 1007 (1972); Fort Morgan Vapor Jet, P.S. Docket No. 12/64 (P.S.D. Sept. 29, 1982). This remedy is appropriate so long as it is not used as punishment. Donaldson v. Read Magazine and Lynch v. Blount, supra. Cf. Senate Report No. 1818, 86th Cong., 2nd Sess., June 30, 1960, reprinted in 1960 U.S. Code Cong. and Admin. News 3245, 3246. Further, the first amendment allows reasonable restrictions on advertising. E.g., Athena Products Ltd., P.S. Docket No. 11/77 (P.S.D. June 21, 1982); Lynch v. Blount, supra; United States Postal Service v. Athena Products, Ltd., 654 F.2d 362 (5th Cir. 1981), cert. den. 50 L.W. 3802 (1982); National Commission on Egg Nutrition v. F.T.C., 570 F.2d 165, 165 (7th Cir. 1977).
In accordance with this decision, False Representation Orders will be issued for the following Florida addresses:
1. Cosvetic Laboratories, Inc., P.O. Box 1044, Deerfield Beach, FL 33441: Bio-Genesis (DM 78, 80 and 81); Bio-Genesis Shampoo (March 1981 Body Forum, DM 78 and 80; Jojoba Oil (March 1981 Body Forum, DM 78 and 80); Biotein H-3 with Nucleic Acid (DM 78 and 80); Bio-NC 36 (DM 78 and 80); and German Formula Hair Vitamins (DM 78 and 80).
2. Cosvetic Labs, P.O. Box 2481, Pompano Beach, FL 33061: Bio-Genesis (March 1981 Body Forum).
3. Cosvetic Laboratories, P.O. Box 1097, Deerfield Beach, FL 33441: Bio-Genesis (February and March 1981 Body Forums), DM 62 and 67; Bio-Genesis Shampoo, (February and March 1981 Body Forums); Jojoba Oil (December 1980, January, February and March 1981 Body Forums, DM 62, 67 and 69); Biotein H-3 with Nucleic Acid (DM 62, 67 and 69); Bio-NC 36 (DM 62 and 67); German Formula Hair Vitamins (DM 62, 67 and 69); and LB-49 (DM 62 and 67).
4. Peak Labs, P.O. Box 1097, Deerfield Beach, FL 33441: Biotein H-3 with Nucleic Acid (February 1981 Body Forum).
5. Cosvetic Labs, P.O. Box 50135, Lighthouse Point, FL 33064: Bio-Genesis (January 1981 Body Forum).
1/ This magazine is published by Respondent and is primarily devoted to advertisements of and articles relating to or promoting its various products.
2/ It is noted that the February 1981 issue includes a "Notice" which disclaims this advertisement. However, the notice does not adequately offset the cited representations. It is detached from the magazine and therefore could easily have been missed. (Compare the criticism of the U.S. Postal Service in the January 1981 "Letter From Publisher", p. 4.) Moreover, the February "Open Forum" (p. 5) is devoted to Bio-Genesis and contains four letters touting its use which are unaccompanied by any editorial comment, notice, or disclaimer. Similarly, this issue's "Letter from the Editor" (p. 50) describes "independent clinical validation for the benefits of Bio-Genesis" without referencing the Postal Service's findings.
3/ Bio-Genesis was also advertised in direct mail solicitations DM 62 and 67 (Flynn Afft., Exs. 3 and 4), received by customers in November and December 1980, respectively, but the Florida address included is the same as that contained in the February and March 1981 Body Forum advertisements and therefore is already covered by a False Representation Order. See infra.
4/ The Appendix attached to Complainant's motion cites an advertisement for Bio-NC 36 on page 46 of the January 1981 Body Forum which, while including a Florida address, refers to another product called "Neocel". The Appendix also cites page 47 of the April 1981 Body Forum as advertising this product. However, this issue could not be located in the record.