In the Matter of the Complaint Against DANLON HEALTH SYSTEMS 15012 Redhill, Suite A at Tustin, CA 92680-6588 P.S. Docket No. 17/108; 03/04/85 Cohen, James A. APPEARANCE FOR COMPLAINANT: H. Richard Hefner, Esq. Cory F. Dudley, Esq. Consumer Protection Division Law Department U. S. Postal Service Washington, DC 20260-1112 APPEARANCE FOR RESPONDENT: Brian O'Neill, Esq. 1137 2nd Street Suite 106 Santa Monica, CA 90403-5011
Respondent has appealed from an Initial Decision of an Administrative Law Judge which holds that Respondent is engaged in conducting a scheme or device to obtain money through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.
The Consumer Protection Division, Law Department, United States Postal Service (Complainant), initiated this proceeding by filing a Complaint which alleges that Respondent, by means of advertisements appearing in publications of general circulation, falsely represents:
"3. . . . directly or indirectly, in substance and effect, whether by affirmative statements, omissions, or implications that:
A. The 'Lazy Lady's Way' Weight Reduction System or System 1000 functions effectively as a remedy for obesity without requiring the exertion of willpower. 1/
B. Users will experience a boost of energy and the elimination of hunger.
C. The ingredients contained in Respondent's Maxa-B-Slim Weight Reduction Appetite Suppressant and Maxa-Vim Plus Extra E Prolonged Release are an integral and essential part of the 'diet' and make a material contribution to a substantial loss of weight and maintenance of the reduced weight."
In its Answer, as amended, Respondent denied all of the allegations of the Complaint. At a hearing before an Administrative Law Judge both parties were given the opportunity to present evidence. Complainant presented the testimony of Ernst J. Drenick, M.D., and Postal Inspectors Ralph Cook and Byron L. Dare. Respondent called no witnesses. Both parties presented documentary evidence.
Following the hearing and after the filing of proposed findings of fact and conclusions of law, the Administrative Law Judge issued an Initial Decision in which he found that Respondent makes the representations alleged in the Complaint and that they are materially false in violation of 39 U.S.C. § 3005. On the basis of these findings, the Administrative Law Judge recommended the issuance of a False Representation Order against Respondent.
In its appeal, Respondent excepts to the Administrative Law Judge's findings and conclusions that the representations alleged in the Complaint are made in its advertisements and that those representations are false. Each of these contentions is discussed below.
The Administrative Law Judge concluded that considering Respondent's advertisements in their totality, the ordinary reader would interpret them substantially as characterized in paragraph 3 of the amended Complaint (I.D., COL 1 & 2). He also quoted certain language from the advertisements which he found made the representations set forth in paragraph 3 (I.D. at pp. 3-5).
Respondent contends that its advertisements represent, and the ordinary reader would understand, that the product being advertised is a weight reduction system which includes a dietary regimen in addition to the "Maxa-B-Slim" tablets. Regardless of the merit of this contention, it does not go to the issues raised by the Complaint. In paragraph 3 of the Complaint it is alleged that Respondent falsely represents that its product will achieve results "without requiring the exertion of willpower" (Compl., para. 3A), that its product will supply a "boost of energy and the elimination of hunger" (Compl. para. 3B), and that the ingredients contained in its tablets "are an integral and essential part of the 'diet'" and will "make a material contribution to a substantial loss of weight and maintenance of the reduced weight" (Compl., para. 3C). Applying the ordinary reader test to the totality of both of Respondent's advertisements, it is concluded that these representations are made by Respondent. This conclusion is not only supported by the overall tenor of the advertisements, but also by the specific language quoted by the Administrative Law Judge, as well as other language in the advertisements. Accordingly, the Administrative Law Judge's findings and conclusions that the ordinary reader would understand Respondent's advertising to make the representations alleged in paragraph 3 of the Complaint is affirmed.
The Administrative Law Judge concluded that all of the representations set forth in paragraph 3 of the Complaint were materially false. This conclusion was based primarily on the testimony of Dr. Drenick, a highly qualified expert in the field of obesity. 2/ At the hearing, Respondent attempted to rebut at least a portion of this testimony by its cross-examination of Dr. Drenick and the introduction into evidence of one page of a report issued by the Advisory Review Panel on Over-the-Counter Miscellaneous Internal Drug Products (47 Fed. Reg. 8466, 8474 (Feb. 26, 1982)). The one page of the report discusses the effectiveness of benzocaine, (one of the ingredients contained in the products which are the subject of this proceeding) in connection with weight control.
Respondent argues that the opinions of Dr. Drenick and the Panel represent tow divergent schools of thought regarding the effect of benzocaine on weight control. It contends that Dr. Drenick clings to traditional ideas and that the Administrative Law Judge's decision condemns new ideas ind direct contradiction to the ruling of the Supreme Court in Reilly v. Pinkus, 338 U.S. 269 (1949). Respondent also attacks Complainant's evidence on the falsity of the representations on the grounds it was based solely on the testimony of Dr. Drenick.
Respondent's reliance on Reilly v. Pinkus, supra, is misplaced because that decision presupposes conflicting credible medical or scientific opinions. That is not the situation here. Dr. Drenick was the only expert witness called to testify in this proceeding. He testified that the informed medical and scientific consensus is that the representations alleged in the Complaint are false (Tr. 70-71, 77). He further testified that he did not consider the report of the Panel to be an authoritative source which would be relied on by the medical community to determine the efficacy of benzocaine (Tr. 93-97, 100-101). Moreover, there is no evidence of the qualifications of the Panel members who prepared the report and none of the members were called as witnesses. Thus, Respondent's argument that the Panel report is as persuasive or more persuasive, than the testimony of Dr. Drenick is rejected. Dr. Drenick's0 unrebutted statement that his opinion concerning Respondent's system, as advertised, reflected the informed medical and scientific consensus, is sufficient to establish Complainant's case and to distinguish it from the concerns expressed in Reilly v. Pinkus, supra. 3/ See, e.g., U.S. Health Club, Inc., v. Major, 292 F.2d 665 (3d Cir. 1961).
The Administrative Law Judge properly relied on the testimony of Complainant's expert in finding that representations 3A-C were false. Respondent has presented no credible evidence to rebut the informed medical consensus established by Dr. Drenick regarding the efficacy of benzocaine as an aid to weight control. With respect to the remaining ingredients in Respondent's products, Respondent failed to offer any evidence regarding efficacy for any of the purposes advertised. Also, there is no credible evidence supporting representations 3A and B that Respondent's system would cause weight loss without willpower, or would boost energy and eliminate hunger. With respect to these representations, the informed medical consensus is to the contrary (Tr. 70-71, 77).
Accordingly, there is no merit to this exception.
Respondent argues that a violation of 39 U.S.C. § 3005 cannot be found unless Complainant proves the element of fraudulent intent. This argument is rejected. In 1968 the false representation statute was amended to remove proof of intent to deceive as a necessary element for finding a statutory violation. See, Unique Ideas, Inc., v. United States Postal Service, 416 F.Supp. 1142 (S.D.N.Y. 1976); Lynch v. Blount, 330 F.Supp. 689 (S.D.N.Y. 1971), aff'd, 404 U.S. 1007 (1972); Conan Research, P.S. Docket No. 12/7 (P.S.D. July 29, 1982); Wilmont Products, P.S. Docket No. 6/46 (P.S.D. July 19, 1979); Sauna Belt, Inc., Docket No. 3/43 (P.O.D. Oct. 4, 1972). Accordingly, this exception has no merit.
After consideration of the entire record and Respondent's exceptions to the Initial Decision, it is concluded that Respondent is engaged in a scheme to obtain money through the mail by means of materially false representations. Accordingly, Respondent's appeal is denied and a False Representation Order under 39 U.S.C. § 3005 is issued herewith.
1/ The Complaint was amended at the hearing to add the words "or System 1000" (Tr. 5-16).
2/ The Administrative Law Judge also properly relied on the written statement of Dr. Drenick (CX-18), and an excerpt from a publication considered to be an authoritative source by the medical profession (CX-19; Tr. 73-75).
3/ Contrary to Respondent's assertion, the proper test for agency review of an Initial Decision of an Administrative Law Judge is preponderance of the evidence rather than substantial evidence. See, Steadman v. SEC, 450 U.S. 91 (1981); Athena Products, Ltd., P.S. Docket No. 12/136 (P.S.D. May 6, 1983).