In the Matter of the Complaint Against RUSH INDUSTRIES, INC. 871 Willis Ave. Albertson, NY 11507-1915 and HAROLD BREINDEL 871 Willis Ave. Albertson, NY 11507-1915 P.S. Docket No. 18/169 07/02/85 Dicus, Carroll C. Jr. APPEARANCES FOR COMPLAINANT: Kenneth N. Hollies, Esq., Brendan J. O'Brien, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-1112 APPEARANCE FOR RESPONDENT: Robert Ullman, Esq., Bass, Ullman & Lustigman 747 Third Avenue New York, NY 10017-2803
Respondent has appealed from an Initial Decision of an Administrative Law Judge which holds that Respondent is engaged in conducting a scheme or device for obtaining money or property 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 these proceedings by filing a Complaint alleging that Respondent is engaged in conducting a scheme or device to obtain money through the mail by
"3. By means of the solicitations described in paragraph 2, Respondents represent, directly or indirectly, in substance and effect, whether by affirmative statements, implication or omissions that:
a. Formula Plus will prevent facial lines from emerging in or on users' faces.
b. Formula Plus will remove facial lines already existing on users' faces.
c. Formula Plus is effective as described in subparagraphs (a) and (b) of this paragraph beyond any effect commonly available from other 'creams, lotions, and make-ups.'
d. The results of using Formula Plus are substantially similar to results achievable by a face lift operation.
e. Users of Formula Plus will obtain significant nourishment from the vitamins and nutrients found in Formula Plus.
f. Formula Plus will cause users to look younger by affecting the structure and/or appearance of wrinkles beyond any effect attributable to moisturizing and/or cosmetically covering such wrinkles.
4. The aforesaid representations are materially false as a matter of fact."
In a timely filed Answer, Respondent denied that it makes the representations alleged and denied the falsity thereof. At a hearing before an Administrative Law Judge, Complainant presented the testimony of Inspector DeWayn Marzagalli, Philip Feldman, M.D., a dermatologist and Samuel Uretsky, a doctor of pharmacy. Respondent presented no witnesses. Both parties presented documentary evidence. Following the filing of proposed findings of fact and
conclusions of law, the Administrative Law Judge issued an Initial Decision (I.D.) in which he found that Respondent makes the representations alleged in the Complaint and that the representations are false. The Administrative Law Judge also held that the existence of a Consent Agreement executed by Respondent in a previous case did not bar this action.
On March 3, 1978, the parties entered into a Consent Agreement regarding the promotion of Formula Plus. Respondent argues in Exception 1 the Consent Agreement bars the present action because of the doctrines of res judicata and collateral estoppel. As the Administrative Law Judge noted, this argument was addressed in Eden Valley Nursery Sales, P.S. Docket No. 7/23 (P.S.D. February 15, 1980), which holds that a Consent Agreement is not a final determination and, therefore, does not give rise to res judicata or collateral estoppel. After a review of the record in this case, including Respondent's arguments on brief, it is concluded that no basis exists for distinguishing this matter from Eden Valley. Accordingly, the decision of the Administrative Law Judge rejecting Respondent's argument on this issue is affirmed.
Respondent has filed eight other exceptions and supporting arguments. While Respondent excepts to the findings that it makes the representations in Complaint Paragraphs 3(c) and 3(f), generally the exceptions are directed to the issue of whether Formula Plus will produce the results represented in Respondent's advertisement.
The entirerecord has been reviewed and Respondent's arguments considered. Based on this review, it is concluded that the findings and conclusions of the Administrative Law Judge relating to the making of the representations and their falsity as alleged in the Complaint are supported by a preponderance of the reliable and probative evidence.
With respect to Respondent's contention that the Administrative Law Judge erred in finding that the representations alleged in Complaint paragraphs 3(c) and 3(f) are made, it is concluded that the findings are supported by the record. The meaning of an advertisement is to be interpreted according to the impression it would most probably produce in the ordinary mind. Donaldson v. Read Magazine, 333 U.S. 178 (1948). The direct quotations from Respondent's promotional material quoted by the Administrative Law Judge (I.D. at 5, 6) would create the impression to the ordinary reader that the representations alleged in the Complaint are made. As Respondent has not excepted to the Administrative Law Judge's other findings that Complaint allegations 3(a), (b), (d), and (e) are made by Respondent's promotional materials, the Initial Decision's conclusion that Respondent makes all the representations alleged in the Complaint is affirmed.
The falsity of the representations is demonstrated through unrebutted testimony establishing the cause of facial lines, how the appearance of lines may be altered, and the effect of Formula Plus on facial skin. The evidence proves that, except for the most
superficial lines in the very thin uppermost layer of skin called the stratum corneum, lines are the result of a loss of elasticity in the dermis and subcutaneous fat caused principally by aging. Other factors causing facial lines include muscle tension, exposure to sun and sudden fluctuations in weight. In contrast, Formula Plus, like other moisturizing creams, moisturizes the stratum corneum for several hours. This process, which has no cumulative effect, causes swelling of the stratum corneum and briefly obscures fine, superficial lines therein. Moreover, the evidence establishes that no significant nourishment results from topical application of Formula Plus. The limited effect produced is misrepresented in Respondent's promotional literature, which speaks of Formula Plus as singularly effective in prevention and removal of facial lines, compares its effect to a face-lift, and describes Formula Plus as a rich source of nutrients.
Respondent argues that its promotional materials are not materially false in comparing the effects of Formula Plus to a face-lift and that its representation is mere puffing. It also contends its promotional materials do not deter use of surgery or other related procedures as it perceives the Administrative Law Judge to have held in Conclusion of Law 4. As to the latter point, a review of the Initial Decision does not support Respondent's reading of Conclusion of Law 4, because the Administrative Law Judge did not find Respondent's advertisement a deterrent to people seeking a face-lift.
The record establishes that the improvement in appearance to facial skin attributable to a face-lift is not achievable with Formula Plus. The favorable comparison in the advertisement is not merely puffing, as it is a significant departure from the results actually achievable with Formula Plus. Further, the implication that users would experience an improvement in appearance similar to a face-lift is material because it would provide a strong inducement to buy the product.
Respondent contends the Administrative Law Judge erred in not giving greater weight to findings in Sans Egal, P.S. Docket No. 5/107 (I.D. April 4, 1977, aff'd P.S.D. June 13, 1977) which Respondent would include in the decision here. As the parties and product are different, inclusion of the findings is not appropriate. Respondent also argues that testimony at the hearing supports a finding that Formula Plus would provide the same effects as Sans Egal. The issue in this case is not what benefits may be derived from the use of Respondent's product, but whether it will produce the results represented in Respondent's advertising. See San Egal, P.S.D. at p. 5. Further, the testimony noted established that Sans Egal contains ingredients, olive and mineral oils, which are not present in Formula Plus. Moreover, it is concluded that, even if all the effects of Sans Egal were attributed to Formula Plus, Respondent's promotional literature would still be materially false. Accordingly, the Administrative Law Judge did not err by failing to include findings attributing to Formula Plus all the effects of Sans Egal.
Finally, Respondent argues that, whatever the merits of the Complaint allegations, a cease and desist order is inappropriate. The major reason advanced is that the advertisement in question has been in use for six years in the face of a Consent Agreement. However, that consideration cannot outweigh the overriding concern of protecting the public where promotional representations have been proven false.
After consideration of the entire record it is concluded that Respondent is engaged in a scheme to obtain money through the mail by means of materially false representations. Accordingly, a False Representation Order and a Cease and Desist Order under 39 U.S.C. § 3005 is issued herewith.