Petition — Original Cosmetics Products, Inc. v. Strachan

Supreme Court brief1979

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Text

JUL 30 1979

| MICHABL RODAK, JR, CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1978 ,

OriainaL Cosmetics Propucts, Inc., and

Love Sone Cosmetics Corp.,

Petitioners,

against

Joun Srracuan, Postmaster at New York City, New York,

and Unirep Sratres Postrat Service,

Respondents.

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Herpert Monte Levy

Attorney for Petitioners

9 Kast 40th Street

New York, N.Y. 10016

(212) 725-5959

TABLE OF CONTENTS

a aR Ree IR Se SR SEI a 2

UE AeeeEEGGER bhades ca ohRs iscesceccsenes's 2

Questions Presented for Review .................. 2

Constitutional Provisions and Statutes Involved ... 3

NN AR I aac k ab ene.s 4

Reasons For GRANTING THE WRriT:

I—In ruling that the judicial review standard in

postal false representation cases is substantial

evidence, the Court below decided an important

federal and Constitutional question which has

not been, but should be, settled by this Court—

and decided it, moreover, in a way in conflict

with the applicable decision of this Court .... 7

II—Under any of the tests of judicial review, the

banning of your petitioners’ advertising was in

conflict with applicable decisions of this Court,

MMC GROWN SO TOVOTOOG coco cic cnccccinceses 4)

I1I—In ruling 3005 constitutional though it permits

opening of mail without judicial warrant, the

Court below decided a federal question in a

way directly in conflict with prior decisions of

CRW BRD sat iee Vek reer sel IG UHAWaa toa’ 11

1V—tThe constitutionality of 3005, as against claims

of due process and free speech violations, has

not been determined by this Court. Thus the

Court below decided an important question of

federal law which has not been, but should be

ee EE ra 12

ae ee an eeeeee 14

ii TABLE OF CASES

PAGE

Appenpix A—Order and Judgment of the United

States Court of Appeals for the Second Circuit la

Appenpix B—Memorandum and Order of United

States District Court, Southern District of New

ME AMER Mae habia Vas te EEEE SC OER Soebe oe eek. 6a

Appenpix C—Decision of Administrative Law Judge lla

Apprenpix D—Opinion and Order of Judicial Officer.. 28a

Arrenpix E—Magistrate’s Recommendation ....... 4a

TABLE oF Cases

Reilly v. Pinkus, 338 U.S. 269 (1949) .........0.. 7, 8, 12

Virginia State Board of Pharmacy vy. Virginia Citi-

zens Consumer Council, Inc., 425 U.S. 748

ch RITES eS NRCRSR Rs NG See Ob a tea 8, 12,13

Addington v. Texas, —— U.S. —— (1979) ........ 8, 9, 10

Jackson v. Virginia, —— U.S. —— (1979) ........ 8, 9, 10

American School of Magnetic Healing v. McAnmulty,

BOG GER COED ok pC AEs nd ss SAPO Oe Cctv dee e 9

Cole ¥. Aveamees, SEB U.S. 196 0. ccc eee secseiee 10

Presnell v. Georgia, —— U.S. ——, ...........005- 10

United States v. Chadwick, 433 U.S. 1 (1977) ....... 11

Ex Parte Jackson, 96 U.S. 727 (1878) .............. 11

Craig v. Boren, 429 U.S. 190 (1976) .............. 11

Carey v. Population Services Intern., 431 U.S. 678

og oo) Sm SA FD hae pee ake nen AMY 11

TABLE OF CASES ill

PAGE

Lynch v. Blount, 330 F. Supp. 689 (S.D.N.Y. 1971),

GE; We Ws BET CAPER) Bais ceca vscciscuess 12

Blount v. Rizzi, 400 U.S. 410 (1971) ............0.. 12

DeJonge v. Oregon, 299 U.S. 353 (1937) ............ 13

Time, Inc. v. Hill, 385 U.S. 374 (1967) ...........46. 13

Shelton v. Tucker, 364 U.S. 479 (1960) ............ 13

Beneficial Corp. v. F.T.C., 542 F. 2d 611 (3d Cir.,

Bate SUE DER pe ana a iy ae Pay See ga 13

National Com’n on Egg Nutrition v. F.T.C., 570 F. 2d

des Si > & Rena ape ergee ere re 13

ConstItuTIONAL Provisions, Statutes & Ruxes Crrep

U.S. Constitution, First Amendment ............ 2,13, 14

U.S. Constitution, Fourth Amendment .............. 3

U.S. Constitution, Fifth Amendment ............-. 3,4, 13

Sh CUR SA)? iwi OTR Cites ce ren sans 7

OD Rte, MRUED seks cccbedtansccvsbunecssvedus 2

OO TEES, SE ass bs WES ok ons POND OAT Ties Poe o's 7

SP Titers SOUS she vstnercdccdvsvececteversesss passim

IN THE

Supreme Court of the United States

OCTOBER TERM, 1978

we srs.

OricinaL Cosmetics Propucts, Inc., and

Love Sone Cosmetics Corp.,

Petitioners,

against

Joun Srracuan, Postmaster at New York City, New York,

and Unrrep States Postau Service,

Respondents.

PETITION FOR WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

To the Chief Justice and the Associate Justices of the

Supreme Court of the United States:

Your petitioners, Original Cosmetics Products, Inc., and

Love Song Cosmetics Corp., hereby petition for a writ of

certiorari to review the judgment of the United States

Court of Appeals for the Second Circuit holding that an

administrative determination of the Postal Service, that

petitioners were engaged in a scheme or device for obtain-

ing moneys through the mails by making false representa-

tions in violation of 39 U.S.C. § 3005, is to be upheld merely

if there is substantial evidence to support the factual

findings of fact made, in the absence of scientific experi-

mentation which expert medical witnesses for both sides

agreed should be performed, and where neither medical

expert was able to testify to a reasonable medical certainty.

Opinions Below

The opinion of the United States Court of Appeals has not

yet been reported; a copy of its judgment, order and

decree is annexed hereto as Appendix A. The opinion of

the United States District Court of the Southern District

of New York is reported at 459 F.Supp. 496; it is annexed

hereto as Appendix B. The following additional opinions,

one of which is reported, are also appended hereto as

the following respective Appendices: Appendix C, the opin-

ion and recommendation of Postal Service Administrative

Law Judge Grant; Appendix D, the opinion and orders

of the Judicial Officer of the Postal Service; Appendix E,

the opinion of Magistrate Schreiber of the United States

District Court for the Southern District of New York, re-

ported at 459 F.Supp. 499.

Jurisdiction

The order, judgment and degree sought to be reviewed

was made and entered on April 30, 1979. The statutory

provision believed to confer on this Court jurisdiction to

review the order in question by writ of certiorari is 28

U.S.C. § 1254(1).

Questions Presented for Review

1, When a federal administrative agency has deter-

mined that false advertising representations were made in

violation of 39 U.S.C. § 3005, is the appropriate standard

of judicial review, consistent wtih the First Amendment to

the United States Constitution, whether the evidence to

support the findings is a) substantial, as held below; or

b) clear and compelling; or c) proof beyon’ a reasonable

doubt?

2. Are any of these tests met, under all the facts and

circumstances of this case, when a) the complainant’s sole

medical expert admittedly knew nothing about the com-

ponents of the advertised products, was admittedly biased

and prejudiced against them, and never testified as to a

reasonable medical certainty; b) he and your petitioners’

medical experts agreed that it cannot be told if the adver-

tised products work in the absence of scientific testing; c)

money back guarantees were met; and d) in some of the

advertisements, every representation was true, even ac-

cording to the complainant’s medical expert?

3. Is the statute, 39 U.S.C. § 3005, facially, and as con-

strued and applied, in violation of the Fourth Admend-

ment to the United States Constitution because it permits

the opening of mail without judicial warrant?

4. Is said § 3005 in violation of the First and Fifth

Amendments to the United States Constitution, facially,

and as construed and applied, because it constitutes a prior

restraint upon later truthful advertising of the same pro-

duets, and is unnecessarily drastic?

Constitutional Provisions and Statutes Involved

First Amendment:

“Congress shall make no law * * * abridging the

freedom of speech, or of the press * * *”.

Fourth Amendmert:

“The right of the people to be secure in their

papers and effects, against unreasonable searches and

seizures, shall not be violated * * *”.

Fifth Amendment:

“No person shall be * * * deprived of * * * liberty,

or property, without due process of law * * *”.

39 U.S.C. § 3005:

“False representations; lotteries

(a) Upon evidence satisfactory to the Postal Serv-

ice that any person is engaged in conducting a scheme

or device for obtaining money or property through

the mail by means of false representations, * * * the

Postal Service may issue an order which—

(1) directs the postmaster of the post office at

which mail arrives, addressed to such person or to

his representative, to return such mail to the sender

appropriately marked as in violation of this sec-

tion, if the person, or his representative, is first

notified and given reasonable opportunity to be

present at the receiving post office to survey the

mail before the postmaster returns the mail to the

sender; and

(2) forbids the payment by a postmaster to the

person or his representative of any money order

or postal note drawn to the order of either and

provides for the return to the remitter of the sum

named in the money order or postal note.”

Statement of the Case

The Consumer Protection Service of the United States

Postal Service, as complainant, brought a proceeding before

a Postal Service Administrative Law Judge claiming that

petitioners were engaged in a scheme or device for obtain-

ing moneys through the mails by making false representa-

tions in violation of 39 U.S.C. § 3005. Petitioner Original

had disseminated a brochure noting that it was selling

items as novelties only (23a)*, being “Leaenpary APHRO-

* Such references are to the Joint Appendix filed below.

DISIACS WITH THE PLACEBO QUALITIES DOCTORS HAVE USED FOR

years”, Petitioner Love Song’s brochure, attacked in the

Administrative Complaint, made no reference to aphro-

disiacs (25a). The Consumer Protection Service charged

that certain products in both brochures were advertised

falsely as aphrodisiacs.

The Government’s expert witness, Dr. Hotchkiss, admit-

ted bias against the products involved (293a-294a).* He

further agreed that the efficacy of the ingredients of your

petitioners’ products could not be properly established with-

out double-blind testing, including experiments with a

placebo, in which the experimentor himself does not know

which product is the placebo, because the experimentor

might be biased (292a-293a).* He further testified that

*“Q. And, sir, when did you agree to testify for the Govern-

ment in this case?

A. On Friday the 13th.

Q. The same day you were asked?

A. Yes.

Q. Don’t you think you might be a little biased and leaning

toward a conclusion with respect to the items here?

A. Yes. I think it is possible that I think these drugs are

worthless. I think they are being pushed on the publie who is

paying for them and I am biased about them. But I am trying

to balance any bias that I may have on the honesty of the an-

swering of your questions.

Q. I can appreciate that, sir. But this was all without any

ial hs > ae whatsoever?

A. Yes.”

2“. * © © Anyhow, the point is, before you can judge the

effect of the drug, you should really have experimentation of it,

isn’t that the point, with placebos and controls?

A. You say that anybody should know when they are getting

a drug whether—again, I would like to—

A. Let me start again. * * *

Before one can really judge the effectiveness of a drug or a

compound, there should be medical experimentation where there

should even be the double-blind test where the doctor does not

know what is the placebo and what is not the placebo?

A. That is how they desire it, yes,

Q. And that is because the doctor might be biased and leaning

towards a conclusion of the worth of the drug; correct?

A. Yes.”

“, .. no one, no physician knows anything about” the in-

gredients of the products involved (277a).

No experimentation whatsoever had been done to de-

termine whether the items had value as aphrodisiacs (137a),

and only within the last decade did science have available

techniques to study such substances (167a-169a).

The complainant’s expert witness, Dr. Hotchkiss, admit-

ted that every single statement in one of the advertise-

ments, for Ginseng, was correct (268a-270a). He further

admitted that no false representation had been made in the

advertisement for Turnera Aphrodisiaca Caps (244a-245a).

He gave only his opinion as to whether the products would

work for their advertised purpose; he at no time testified

as to a reasonable medical certainty.

Your petitioners’ expert witness, Dr. Davis, was unable

to give his opinion as to whether the products worked, in

the absence of experimentation. He did testify, however,

that one product containing Serenoa Serrulata (Jungle

Passion Caps), and several containing Rufous Capsicum

Annum (red pepper) would have an aphrodisiacal effect

because they are mild irritants to the lining of the urinary

tract, and, according to Masters and Johnson’s “Human

Sexual Response”, irritation of the urinary tract will have

an aphrodisiacal effect (134a-136a, 126a, 129a-130a, 134a-

135a, 140a).

Dr. Hotchkiss, the complainant’s expert witness, was

entirely unfamiliar with the medical literature re aphro-

disiac qualities of irritants to the urinary tract (231a.).

The Administrative Law Judge ruled that the advertising

for all products contained false representations, and

recommended an order preventing the products from being

sold. (App. C pp. lla-27a). The Acting Judicial Officer of

the Postal Service affirmed (App. D 28a-40a).

The basis for federal jurisdiction in the court of the

first instance, the Umted States District Court for the

Southern District of New York, was 28 U.S.C. § 1339. In

said court, Magistrate Schreiber recommended the grant-

ing of the motion of defendants (respondents here) for

summary judgment. Though the Magistrate, to determine

what representations had been made by petitioners. had

combined not only the two brochures of petitioners which

were attacked in the complaint, but also a totally sep-

arable brochure of one of petitioners’ [infra, 49a], nowhere

mentioned in the complaint, the District Court, pursuant to

21 U.S.C. § 636(b)(i), concluded that the Magistrate had

applied an appropriate standard for review, i.e., whether

substantial evidence existed to support the findings.

An appeal was taken to the United States Court of

Appeals for the Second Circuit, which affirmed the judg-

ment of the District Court substantially on the basis of

the District Court’s decision.

This petition is to review the Second Circuit order,

judgment and decree affirming the judgment of the District

Court.

REASONS FOR GRANTING THE WRIT

I. In ruling that the judicial review standard in postal

false representation cases is substantial evidence,

the Court below decided an important federal and

Constitutional question which has not been, but

should be, settled by this Court—and decided it,

moreover, in a way in conflict with the applicable

decision of this Court.

In Reilly v. Pinkus, 338 U.S. 269, 277 (1949), this Court

held that since, in a postal fraud case, the Postmaster

General may bar an offender from using the mails and

thus wholly destroy a business, postal orders must be

limited ‘‘to instances where actual fraud is clearly proved.”

(Emphasis supplied.) Since the same bar operates in 3005

eases, this case was decided below in a way in conflict

with Reilly. Moreover, Reilly was decided before this

Court extended free speech protection to commercial ad-

vertising [Virginia State Board of Pharmacy v. Virginia

Citizens Consumer Council, Inc., 425 U.S. 748 (1976)];

hence, since the administrative agency now determines

whether advertising constitutes free speech or falsity, a

strict standard proof must be required lest free speech

be the victim of an agency determination. And free

speech may be abridged, under the decision below, with-

out clear proof, even though the alleged misrepresentation

is made in total innocence, since 3005 does not require any

proof of wilful misrepresentation before the Postal bar

operates.

In any event, as is apparent from the decision below,

this Court has never determined the standard of judicial

review in 3005 cases. Decision of such issue is jarticu-

larly important in the light of this Court’s recent rulings

in Addington v. Texas, —— U.S. —— (1979) and Jackson

v. Virginia, —— U.S. —— (1979).

In Addington, this Court held that in civil commitment

cases, where the court operates for a non-punitive purpose,

clear and convincing evidence—usually required “in civil

cases involving allegations of fraud or some other quasi-

criminal wrongdoing”—must be found. Since 3005 oper-

ates in a punitive and quasi-criminal fashion—by putting

the mailer out of business, depriving him of receipt of

monies earned by previously placed advertisements, and

by preventing even truthful later advertisements for the

products involved,—surely the “clear and convincing test”

should be applicable, at a minimum, to 3005 cases.

Since the consequences of a 3005 order may indeed be

more severe than those of a state criminal conviction, we

urge that the standard of judicial review should be whether

there was proof beyond a reasonable doubt. Surely, depri-

vation of the mailer’s free speech should not be counte-

nanced in the absence of proof beyond a reasonable doubt

of the speech’s falsity. Unless somehow free speech is to

be less protected than freedom from incarceration for a

crime, the proof beyond a reasonable doubt standard must

be employed. m

Jackson held that in federal habeas corpus review of a

state conviction, the applicant wins “if it is found that

upon the record evidence adduced at the trial no rational

trier of fact could have found proof of guilt beyond a

reasonable doubt.” In a federal court’s review of a federal

administrative agency’s determination that advertising was

false and hence not protected by the First Amendment, the

applicable standard, freed from the constraints of the fed-

eral-state relationship, and protective of a Constitutional

right, should be at a minimum the Jackson test,—and, in-

deed, the reviewing court should require proof beyond a

reasonable doubt.

The substantial evidence test, the usual standard for re-

viewing findings of facts in purely civil cases between pri-

vate parties, should not be applied in appellate adjudica-

tions of constitutional rights with quasi-criminal conse-

quences. Neither abridgments of constitutional rights nor

imposition of quasi-criminal penalties should be allowed to

turn on the preponderance of evidence before an adminis-

trative tribunal, judicially reviewable only to determine

whether there was substantial evidence.

Il. Under any of the tests of judicial review, the

banning of your petitioners’ advertising was in

confict with applicable decisions of this Court,

and should be reversed. !

In American School of Magnetic Healing v. McAnnulty,

187 U.S. 94 (1902), this Court ruled that mere medical

opinion evidence may not be the basis of a finding of false

advertising. Recently, this Court has noted in Addington v.

Texas, supra, that “Within the medical discipline, the

traditional standard for ‘factfinding’ is a ‘reasonable medi-

cal certainty’”. Yet the complainant’s expert witness gave

only his mere opinion—and, significantly, never as to a

“reasonable medical certainty”.

Now that advertising is protected by the First Amend-

ment, it is all the more important that the advertiser be pro-

tected against mere medical opinion, especially as we now

learn each day that yesterday’s medical gospel is today’s

riedical heresy. In the case at bar, the finding of false

advertising cannot be upheld under any test of judicial

review, since the sole medical expert for the complainant

a) gave only his naked opinion, b) never as to a reasonable

medical certainty, c) as to products about whose ingre-

dients he admitted no physician knows anything, d) which

he himself testified should be subjected to double-blind

experimentation because the experimentor might be biased

against the product, and as to which products e) he himself

was admittedly biased. _

Moreover, even the complainant’s witness admitted that

all advertising representations for two of the products

were true. And, he was totally unfamiliar with the widely

known work of Masters & Johnson, which showed, accord-

ing to the testimony of petitioners’ expert witness (never

contradicted) that most of the products would have an

aphrodisiacal effect.

We further note that the Magistrate’s combining the bro-

chures of both petitioners, attached to the complaint, to-

gether with a third brochure never the subject of any,

charge, was a violation of due process. Indeed, only the

other day this Court reiterated that “It is axiomatic that

a conviction upon a charge not made or upon a charge not

tried constitutes a denial of due process. Cole v. Arkan-

sas, 333 U.S. 196, 201; Presnell v. Georgia, ——U.S. ——.”

Jackson v. Virginia, supra. Yet the findings against your

petitioners are based not on reading each of the attached

brochures of each petitioner separately to determine what

each brochure represents, as the administrative complaint

charged. Instead, both brochures together with a third

that was never the subject of any charge, were all read

together. Thus, the finding of a 3005 violation was made

in violation of axiomatic due process. It cannot properly

stand under any judicial review.

III. In ruling 3005 constitutional though it permits

opening of mail without judiical warrant, the

Court below decided a federal question in a way

directly in confiict with prior decisions of this

Court.

Under 39 U.S.C. § 3005, the local Postmaster, in the event

of a finding adverse to the mailer, is necessarily required

to open the mail addressed to the advertiser to determine

whether it is in response to an allegedly false representa-

tion. Such opening is made without judicial warrant.

Indeed, the administrative order issued herein (App. D,

pp. 35a-6a) requires the Postmaster to satisfy himself that

the customer’s mail is not related to the products adver-

tised falsely, which obviously cannot be done without the

mail being opened.

Since mail addressed to the advertiser from its customers

may be opened without judicial warrant, the decision below

is in confliet with the decisions of this Court holding that

the Fourth Amendment prohibits the opening of mail

matter without a judicial warrant. United States v. Chad-

wick, 433 U.S. 1 (1977); Ex Parte Jackson, 96 U.S. 727,

733 (1878).

Of course, the advertisers may assert such privacy

rights of their customers. Craig v. Boren, 429 U.S. 190

(1976); Carey v. Population Services Intern., 431 U.S.

678 (1977). Since the customers involved are seeking

relief from sexual inadequacies, the violations of their

rights are peculiarly egregious here.

Curiously, the Second Circuit ignored this point, through

it was raised in the District Court (109a-110a), and reiter-

ated upon appeal.

IV. The constitutionality of 3005, as against claims

of due process and free speech violations, has

not been determined by this Court. Thus the

Court below decided an important question of

federal law which has not been, but should be,

settled by this Court.

This Court did not decide in Reilly v. Pinkus, supra,

whether due process and First Amendment rights were

violated by 3005, since neither question was raised therein.

Indeed, since Reilly antedated by more than a quarter of

a century this Court’s decision in Virginia State Board of

Pharmacy, swpra, Reilly could not have considered whether

the statute violated the First Amendment.

Nor, indeed, was there any foreclosure of our points by

this Court’s decision in Lynch v. Blount, 330 F. Supp. 689

(S.D.N.Y. 1971) (three judge Court), aff’d, 404 U.S. 1007

(1972). For the only attack upon the statute in Lynch was

based upon the contention that somehow there was a taking

without due process of law, illegal under Reilly (a point we

have never raised), and that the situation was identical to

that of an obscenity stop order, held unconstitutional in

Blount v. Rizzt, 400 U.S. 410 (1971). Quite apart from the

fact that this case does demonstrate that at least in the

area of sexual advertising, there is as fine a line be-

tween the truthful and the false as between free speech

and obscenity, Lynch was decided prior to this Court’s de-

termination that truthful advertising was protected by the

First Amendment. Moreover, there was no contention in

Lynch as to the overbreadth of the statutory remedy.

We have basically four Constitutional objections to 3005’s

validity, none of which were raised in Lynch or Reilly.

To elucidate:

1. The 3005 remedy is not merely a cease and desist

order, stopping the representations found false. Instead,

it prohibits all further advertising of the products involved,

including truthful advertising. The statute thus conflicts

with Virginia State, supra, by preventing truthful com-

mercial advertising (App. D, 37a, infra).

2. By preventing such truthful advertising in advance,

an unconstitutional prior restraint is imposed. DeJonge

v. Oregon, 299 U.S. 353 (1937).

3. Section 3005 is not directed against fraudulent ad-

vertising, as its predecessors had been. Thus, advertising

which is not intentionally false, but only negligently false,

may be prohibited by 3005. But this Court has held that

negligent speech may not be penalized. Time, Inc. v. Hill,

385 U.S. 374, 389 (1967).

4. The unnecessarily drastic remedies of the statute—

mail and money impounding, opening of customers’ mail,

notification of misdoing to all of the advertiser’s cus-

tomers, and prohibition of all further advertising of the

products involved—when the narrower remedy of a cease

and desist order would cure the evil of faise advertising,

violates the First and Fifth Amendments. Shelton v.

Tucker, 364 U.S. 479 (1960). And other Federal Courts

of Appeal have recently held that overbroad restrictions

of commercial advertising violates the First Amendment.

Beneficial Corp. v. F.T.C., 542 F. 2d 611, 618-20 (3d Cir.,

1976); National Com’n on Egg Nutrition v. F.T.C., 570

F. 2d 157, 164 (7th Cir., 1977).

A further difficult question arises from the Second Cir-

cuit’s construction of the statute holding that 3005 applies

to an advertisement which does not make an express mis-

representation but which “is artfully designed to mislead

those responding to it * * *.” Surely, artfully misleading

speech in the political arena could never be prohibited

consistent with the First Amendment. Query, whether

commercial advertising, also protected by the First

Amendment, may now be prohibited because it is found

misleading by the trier of the facts.

CONCLUSION ©

This petition for certiorari should be granted, and

the decision below reversed.

Dated: New York, New York

July 30, 1979

Respectfully submitted,

Hersert Monte Levy

Attorney for Petitioners

9 East 40th Street

New York, New York 10016

(212) 725-5959

APPENDIX A

Order, Judgment and Decree of the United States

Court of Appeals for the Second Circuit.

UNITED STATES COURT OF APPEALS

For THE Seconp Circuit

At a stated Term of the United States Court of Appeals

for the Second Circuit, held at the United States Court-

house in the City of New York, on the Thirtieth day of

April, one thousand nine hundred and seventy-nine.

Present:

HonoraB_e J. JosepH SMITH

HonorasBLe THomas J. MEsKILL,

Circuit Judges,

HonoraB Le Cuares S. Haicut, JRr.,

District Judge*

* Honorable Charles S. Haight, Jr., of the United States Dis-

trict Court for the Southern District of New York, sitting by

designation.

—

OricinaL Cosmetics Propucts, Inc., and

Love Sone Cosmetics Corp.,

Plaintiffs-Appellants,

JoHN SrracHan, Postmaster at New York City, New York

and Unirep Srates Postau SERVICE,

Defendants-Appellees.

»<

Appeal from the United States District Court for the

Southern District of New York.

Appendix A—Order and Judgment of the United States

Court of Appeals for the Second Circuit.

This cause came on to be heard on the transcript of rec-

ord from the United States District Court for the South-

ern District of New York, and was argued by counsel.

This is an appeal from a judgment entered in the United

States District Court for the Southern District of New

York, Leonard B. Sand, Judge, granting summary judg-

ment in favor of the Postmaster of New York and the

United States Postal Service. The district court upheld

the administrative determination of the Postal Service

that Original Cosmetics Products, Ine. and Love Song

Cosmetics Corp. were engaged in a scheme or device for

obtaining money through the mails by means of false rep-

resentations in violation of 39 U.S.C. § 3005, and also

upheld the issuance of an administrative order prohibiting

the delivery of mail to, and the payment of Postal Serv-

ice money orders made out in favor of, the above-men-

tioned corporations if such mail or money orders were

related to the scheme. The judgment of the district court

is affirmed, substantially on the basis of the district court’s

opinion, which in turn was substantially based on the rec-

ommendation of United States Magistrate Sol Schreiber.

The constitutionality of 39 U.S.C. § 3005, the procedures

here employed, and the remedies here instituted cannot be

doubted. See Lynch v. Blount, 330 F.Supp. 689 (S.D.N.Y-

1971) (three judge court), aff’d, 404 U.S. 1007 (1972). See

also Untted States v. Outpost Development Corp., 369 F.

Supp. 399 (D.C. Cal.) (three judge court), aff'd, 414 U.S.

1105 (1973). The recent Supreme Court decision of Vir-

gimia State Board of Pharmacy v. Virginia Citizens Con-

sumer Council, 425 U.S. 748 (1976), does not require a

contrary result. See 425 U.S. at 771: “Untruthful speech,

commercial or otherwise, has never been protected for its

own sake.” See also Friedman vy. Rogers, 47 U.S.L.W.

Appendiz A—Order and Judgment of the United States

Court of Appeals for the Second Circuit.

4151, 4153-54 (U.S. Feb. 21, 1979). That the corporations’

Due Process and First Amendment rights were not vio-

lated is made clear by Reilly v. Pinkus, 338 U.S. 269

(1949).

When federal courts are asked to review a Postal Serv-

ice decision such as the one made here the standard of

review is as follows:

[E]ven though the court, as the original trier of

facts, might have reached a different conclusion, it

may not substitute its own judgment if there is sub-

stantial evidence to support the findings of fact

mages. 64

Thus the court’s power to upset a finding by the

[Postal Service] that the mails are being used in

furtherance of a fraudulent scheme is restricted to

those instances where there is not substantia] evidence

reasonably to support [its] conclusion.

N. Van Dyne Advertising Agency, Inc. v. United States

Postal Service, 371 F. Supp. 1373 (S.D.N.Y. 1974) (Wein-

feld, J.). We are satisfied that this test has been met by

the government. See also Gottlieb v. Schaffer, 141 F.Supp.

7, 14-16 (S.D.N.Y. 1956) (Weinfeld, J.). As explained by

then District Judge Kaufman:

It is no defense that specific isolated portions of the

advertisements might have been true.

It is not each separate word or a clause here and

there of an advertisement which determines its force,

but the totality of its contents and impression of

the entire advertisement upon the general populace.

[E]ven if an advertisement is so worded as not to

make an express misrepresentation, nevertheless, if it

is artfully designed to mislead those responding to it,

the mail fraud statutes are applicable.

Appendix A—Order and Judgment of the United States

Court of Appeals for the Second Circutt.

Borg-Johnson Electronics, Inc. v. Christenberry, 169 F.

Supp. 746, 751 (S.D.N.Y. 1959).

Appellants contend that, in the absenct of scientific ex-

periments demonstrating the lack of effectiveness of their

products, there is a fatal insufficiency of proof that the ad-

verising claims were false. However, Reilly v. Pinkus,

supra, specifically rejected the contention that “even the

testimony of the most experienced medical experts can

never rise above a mere ‘opinion’ unless the expert has

made actual tests of the drug to determine its effects in

relation to the particular representations alleged to be

false.” 338 U.S. at 274. Thus in a given case the necessity

of actual tests becomes a part of the determination com-

mitted by the statute to the Postal Service. Where ‘two

widely held schools of opinion” exist in a field ‘‘where

knowledge has not yet been crystallized in the crucible of

experience,” Reilly, swpra, at 273, 274, interpreting Amer-

ican School of Healing v. McAnnulty, 187 U.S. 94 (1902),

the law may require tests as a foundation for medical

opinion. But medical opinion is sufficient to demonstrate

“not that the substance which appellant was selling was

entirely worthless as a medicine, as to which there was

some conflict in the evidence, but that it was so far from

being the panacea which he was advertising it through

the mails to be, so that by so advertising it he was per-

petrating a fraud upon the public.” Leach v. Carlile, 258

U.S. 138 (1922) (advertisement of “Organo Tablets” held

false which proclaimed their ability to alleviate “nervous

weakness, general debility, sexual decline or weakened

manhood and urinary disorders.”) Reilly v. Pinkus dis-

pensed with the necessity of tests in respect of advertising

which claimed that half a teaspoonful of granulated sea-

weed a day would cause weight loss. Judged by these cri-

teria, there is no basis in the case at bar to invalidate the

Appendix A—Order and Judgment of the United States

Court of Appeals for the Second Circuit.

Postal Service’s findings because of an absence of actual

tests.

We can in no way say that the Postal Service abused its

discretion in refusing to reopen the hearing to permit fur-

ther testimony. See Greene County Planning Board v.

FPC, 559 F.2d 1227, 1223 (2d Cir. 1976), modified en banc

on other grounds, 559 F.2d 1237 (2d Cir. 1977), cert. de-

nied, 434 U.S. 1086 (1978).

As explained by the district court in its memorandum

decision, “[i]t is entirely fitting that governmental action

which has consequences as drastic as those which flow from

a Post Office stop order and which could potentially im-

pinge upon First Amendment rights be subject to careful

scrutiny.” The district judge found that the appellants’

contentions had “received full and fair consideration both

administratively and before the Magistrate.” It is our

judgment that the appellants’ arguments received similar

treatment from the district judge.

On ConsimperaTION WHEREOF, it is now hereby ordered,

adjudged, and decreed that the judgment of the district

court is affirmed.

J. Joseph Smith

J. JosepH Situ, U.S.C.J.

Thomas J. Meskill

TxHomas J. Mesxrx, U.S.C.J.

Charles S. Haight, Jr.

Cuartes S. Haicut, Jr., U.S.D.J.

APPENDIX B

.Memorandum and Order of United States District

Court, Southern District of New York.

UNITED STATES DISTRICT COURT

SouTHERN District or New York

MEMORANDUM and ORDER

76 Crv 4111 (LBS)

OriainaL Cosmetics Propucts, Inc. and

Love Sone Cosmetic Corp.,

Plaintiffs,

—against—

Joun Srracuan, Postmaster at New York City, New York,

and Unirep States Postat Service,

Defendants.

Sanp, D.J.

Pursuant to 28 U.S.C. Section 636(b)(i), this Court is

called upon to ‘‘make a de novo determination of the report

or specified proposed findings or recommendations to which

objection is made’’ with respect to the recommendations

of Magistrate Sol Schreiber that defendants’ motion for

summary judgment be granted.

As set forth in detail in the Magistrate’s Recommenda-

tion (attached hereto), in November, 1975, the Postal

Service instituted an administrative proceeding charging

that plaintiffs’ advertising was materially false for the

following products:

Song of Passion Tablets, Super Ginseng Tablets,

Spanish Fly Imitation, Ginseng and Imitation Span-

Appendix B—Memorandum and Order of United States

District Court, Southern District of New York.

ish Fly, Jungle Passion Caps, All American Booster

Caps with Vit. E, Authentic Turnera Aphrodisiaca

Caps, Drive Her Wild, and Instant Erection Oil.

An administrative decision found that the plaintiffs have

been engaged in a scheme to obtain money through the

mails by means of false representations in violation of 39

U.S.C. Section 3005. An Order was issued prohibiting de-

livery of mail to, and payment of Postal Money Orders in

favor of, plaintiffs with respect to the above products.

Plaintiffs appealed unsuccessfully from the decision of

the administrative law judge to the Judicial Officer of the

Postal Service and, having thus exhausted their administra-

tive remedies, commenced this action. Both parties moved

for summary judgment, Fed. R. Civ. P. 56; by Order dated

September 23, 1977 of the Honorable Gerard L. Goettel,

District Judge (from whom this case was reassigned to the

undersigned), the case was referred to Magistrate Schrei-

ber for the purposes of reviewing the administrative record

and submitting a report and recommended disposition. On

April 25, 1978, after a comprehensive review of the issues

presented, Magistrate Schreiber recommended the granting

of defendants’ motion for summary judgment.

Plaintiffs thereafter filed a thirty-eight page memo-

randum in opposition to the Magistrate’s Recommendation

which they describe as “an informal comment rather than a

formal brief . . . because we believe it will suit the con-

venience of the Court, we herein avoid the conventional

approach of setting forth the facts and then the legal argu-

ments, but, as does the Magistrate, bunch together the

recitation of the evidence and legal argument in regard

thereto”. (Plaintiffs’ Comments, p. 1).

This format lends itself to a somewhat discursive but not

uninteresting dissertation on sexuality, aphrodisiacs and

placebos. However, after a thorough review of the entire

Appendix B—Memorandum and Order of United States

District Court, Southern District of New York.

record, the Magistrate’s Recommendation and the memo-

randa submitted by the parties, we conclude that none of

plaintiffs’ objections have merit.

Plaintiffs begin their contentions by conceding that “the

learned Magistrate accurately sets forth the procedural

posture and background of this ease. Were the facts and

issues as stated by the Magistrate, it would be difficult to

quarrel with his recommendation. But neither our conten-

tions, the law, nor the facts are as the Magistrate suggests

we urged them to be, nor as the finds them to be.” (Plain-

tiffs’ Comments, p. 1). We, therefore, examine plaintiffs’

specific points to see whether this characterization is sound.

First, plaintiffs urge that the Magistrate dealt only with

the issue of facial constitutionality, whereas plaintiffs urged

the unconstitutionality of the statute “as construed and

applied” (emphasis in original). (Plaintiffs’ Comments,

p. 2). But upon analysis, this contention turns out to be

nothing more than a semantic variation of plaintiffs’ prime

* argument that the remedy provisions of 39 U.S.C. Section

3005 are unconstitutional. Plaintiffs base their argument

on the Supreme Court’s holding in Blount v. Rizzi, 400 U.S.

410 (1971), that parallel administrative procedures con-

tained in 39 U.S.C. Section 4006, which deals with obscenity,

were unconstitutional.

This contention, however, is foreclosed by Lynch v.

Blount, 330 F.Supp. 689, 694 (S.D.N.Y.) aff’d 404 U.S. 1007

(1971), where Judge Medina explicitly held:

“We think the safeguards defined in Blount v. Rizzt,

400 U.S. 410, 91 S.Ct. 423, 27 L.Ed 2d 498 (1971), for

obscenity cases are wholly inappropriate, unnecessary

and inapplicable to the field of commercial fraud.”

Plaintifis seek to avoid the impact of Lynch on two

grounds. First, that Virginia State Board of Pharmacy v.

Appendix- B—Memorandum and Order of United States

District Court, Southern District of New York.

Virginia Citizens Consumer Council, Inc., 425 U.S. 748

(1976), holding certain commercial advertising protected

by the First Amendment, opens to question the continued

validity of Lynch. But, as the Magistrate noted, in Vir-

ginia State, the Supreme Court went to some lengths to

make clear its view that the First Amendment does not

prohibit the State from dealing with deceptive or mislead-

ing advertising. 425 U.S. at 770-72.

Second, in its Reply Memorandum of Law in Support of

Plaintiffs’ Motion for Summary Judgment, plaintiffs’ seek

to distinguish Lynch on the grounds that the court there

was dealing with “good old-fashioned schemes to defraud”

which are “easily recognized”. 330 F.Supp. at 695. Plain-

tiffs urge that when one deals in the area of human

sexuality, where the state of our knowledge is far from

complete and where new research is being conducted pro-

ducing new insights and attitudes, different principles

should obtain. The Court finds little basis to quarrel with

plaintiffs’ philosophic discussions concerning the inadvisa-

bility of dogmatism with regard to sexuality, but we do find

it difficult to distinguish cases dealing with “good old-

fashioned schemes to defraud” with the instant case where

plaintiff, among other things, sold common variety red

pepper as “Imitation Spanish Fly” for $5.95 per 24 tablet

bottle.

We have examined all of plaintiffs’ other contentions.

Many of them seemingly put forth as separate objections

are but variations on plaintiffs’ principal themes; others

are “quibbles” which either fail to undermine the basic

soundness of the Magistrate’s conclusions or lack support

based on a fair reading of the record.

We have concluded that the Magistrate applied the appro-

priate standards for review of the administrative decision

under challenge and correctly interpreted the applicable

law.

10a

Appendix B—Memorandum and Order of United States

District Court, Southern District of New York.

It is entirely fitting that governmental action which has

consequences as drastic as those which flow from a Post

Office stop order and which could potentially impinge upon

First Amendment rights be subject to careful scrutiny. We

are satisfied that plaintiffs’ contentions received full and

fair consideration both administratively and before the

Magistrate.

The Magistrate’s Recommendation is accepted by this

Court and summary judgment is granted in favor of

defendant.

So ORDERED.

Dated: New York, New York

July 12, 1978

Lzonarp B. Sanp

U.S.D.J.

lla

APPENDIX C

Decision of Administrative Law Judge.

(SEAL)

OFFICE OF ADMINISTRATIVE LAW JUDGES

Wasurneoton, D. C. 20260

P.S. Docket No. 4/120

’™

In the Matter of the Complaint Against

OrietnaL Cosmetic Propucts, Inc.

P.O. Box 480

and

Love Sone Cosmetic Corp.

P.O. Box F

New York, New York 10011

and

Love Sone CosMETICcs

P.O. Box 498 Cooper Station

New York, New York 10003

H. Richard Hefner, Esq., Law Department, United States

Postal Service, Washington, D.C., for Complainant

Herbert Monte Levy, Esq., New York, New York, for

Respondents

Before: Quentin E. Grant, Administrative Law Judge

12a

Appendix C—Decision of Administrative Law Judge.

InitTiAL DEcIsIon

Complainant alleges that respondents are engaged in

conducting a scheme or device for obtaining money or

property through the mails by false representations in

violation of 39 U.S.C. §3005. The proceeding involves nine

products described hereinafter in detail. |

The complaint alleges that respondents attract attention

to these products by means of advertising matter contain-

ing false representations calculated and intended to induce

readers therof to remit to respondents money or property

for the product through the mails.

The complaint further alleges that by means of such

advertising matter, respondents expressly and impliedly

represent to the public in substance and effect:

“(a) Sone or Passion TaBLets are an effective aphro-

disiac or sexual stimulant. (e.g., ‘Song of Passion is a

unique blend of aphrodisiacs ...,’ ‘It is one of the

best so-called aphrodisiacs for a satisfying marital rela-

tion that can be found anywhere.’ etc.)

“(b) Super Grnsenc Tasers are an effective means

of increasing and prolonging sexual virility and po-

tency. (e.g., ‘It has been used by the Orientals for

over 5,000 years to increase sexual virility and prolong

life and potency. Indeed, if one is to believe all the

legendary writing on this exotic herb, it then can indeed

be called “The Root of Virility”.’ ete.)

“(¢) Spanish Fry Imrration is an effective aphro-

disiac or sexual stimulant for men and women. (e.g.,

‘Our Spanish Fly Imitation is a special blend of exotic

oriental spices designed to create a mild irritation of

the urinary tract. Upon passage thru the body tiny

particles of this genuine imported spice effectively and

13a

Appendia C—Decision of Administrative Law Judge.

safely stimulate the sexual organs in both the male and

female and has the potential to produce real excite-

ment.’ etc.)

“(d) Grysene anp Imitation SpanisH Fty is an ef-

fective means of heightening and prolonging sexual

performance, capacity and enjoyment. (e.g., ‘The Chi-

nese have used [ginseng] as an aphrodisiac for over

3,000 years.’ ‘Legendary writings say Ginseng is highly

effective in awakening and producing sexual desires in

men and women alike. We have added our imitation

Spanish Fly to the Ginseng to make it work faster and

longer.’ ‘Ginseng is sometimes called “The Turn-on

Root”. To quote S. Steingold “. . . if you think you

have been turned on before you ain’t seen nothing yet”.

Try our Ginseng with Spanish Fly Capsules and find

out what he means.’ etc.)

“(e) Junete Passion Caps are an effective aphro-

disiac or sexual stimulant. (e.g., ‘. . . designed to

bring out the ‘Beast in You’. Students of aphro-

disiacs could write volumes about this product. Try

it and write your own testimonial,’ etc.)

“(f) Att American Booster Tass witH VriTaMIN E

are an effective means of increasing sexual virility

and performance. (e.g., ‘Now!! Excitrnc New Items

FoR A More ABLE AND DesiraBLe You,’ ‘. . . it will

work even better than our old formula to do the job

you want it to.’ ‘. . . or are [you] just feeling tired

and sluggish when you should be roaring like a lion—

this product may be just for you.’ ete.). (As amended

pursuant to stipulation (Tr. 131).

“(g¢) AuTHENTIC TuRNERA ApHROpISIACA Caps are

an effective aphrodisiac or sexual stimulant. (e.g.

‘. . . designed to react upon the body in approxi-

l4a

Appendix C—Decision of Administrative Law Judge.

mately 1 hour. The name Turnera Aphrodisiaca

stands on its own.’ ‘More LeGenpary APHRODISIACS

WITH THE PLaceBo Quatities Doctors Have Usep ror

Years!!’ ete.)

“(h) Drive Her Wi with heighten sexual enjoy-

ment and cause women to engage in sexual intercourse

who were previously too frigid to do so. (e.g. ‘This

new and amazing product is for women who are hav-

ing sexual relations and not getting the utmost en-

joyment that sex can give you.’ ‘It will also help

those who are contemplating sexual relations but are

too frigid to try.’ ‘. . . when applied to the nipples

or clitoris will stimulate and sensitize them arousing

your sexual desires and helping you get the utmost

enjoyment from sex.’ ete.)

“(i) Instant Erection Or will instantly and for a

prolonged period of time enable a man who cannot

otherwise do so to achieve an erection. (e.g., ‘scientifi-

cally formulated to help you get an instant erection

when rubbed on the head of the penis.’ ‘. . . it causes

a flow of blood to rush into the penis, giving you an

instant erection.’ ‘. . . it should cause the penis, to

get harder and larger for a prolonged period of time.’

‘. . . this new and amazing product is for men who

have tried everything else and have had no luck. No

longer need you let the best of joys that life has to

offer pass you by. With this fantastic product you

too can now stand up and be counted.’ ete.)

Finally, the complaint alleges that the representations

alleged are materially false as a matter of fact.

The answer filed by respondents denies the allegations

of the complaint except for an admission as to the dis-

semination of the advertisements annexed to the complaint.

A hearing was held in New York City and Washington,

15a

Appendix C—Decision of Administrative Law Judge.

D. C., at which the parties introduced evidence and there-

after submitted proposed findings of fact and conclusions

of law.

Finpincs oF Fact

1. Respondent uses the mail to disseminate the adver-

tising matter involved in this proceeding. Such advertis-

ing matter is calculated and intended to induce readers

thereof to remit money or property through the mails for

the products as advertised. (Tr. 3; Resp. Proposed finding

no. 1.)

2. I find that the products involved in this proceeding

contain the quantities of active ingredients listed below

(Stip. Joint Ex. 1):

a. Love Song Song of Passion Tablets:

a) 26 mgs Passiflora (a/k/a Passion Flower)

b) 1% Rufous Capsicum Annum (a/k/a Red Pepper)

b. Love Song Super Ginseng:

Powdered extract of ginseng 3:1—10 mgs

ce. Love Song Imitation Spanish Fly:

1% Rufous Capsicum Annum a/k/a Red Pepper)

d. Oriental Love Imitation Spanish Fly w/Ginseng:

a) 26 mgs Ginseng per 4 tablets

b) 1% Rufous Capsicum Annum (a/k/a Red Pepper)

e. Oriental Love Jungle Passion:

a) 1% Rufous Capsicum Annum (a/k/a Red Pepper)

b) 1% Damiana a/k/a Turnera Aphrodisiaca)

c) 1% Serenoa Serrulata (a/k/a Saw Palmetto Ber-

ries)

16a

Appendix C—Decision of Administrative Law Judge.

f. Ortental Love Turnera Aphrodisiaca:

a) 1% Turnera Aphrodisiaca (a/k/a Damiana)

b) 1% Rufous Capsicum Annum (a/k/a Red Pepper)

g. Drive Her Wild Oil:

.75% Methyl Salycilate (a/k/a Artificial Oil of

Wintergreen)

h. Instant Erection Oil:

1% Methyl Salycilate (a/k/a Artificial Oil of

Wintergreen)

i. All American Booster Caps:

a) Vitamin A acetate 1,000 I.U.

b) Ascorbic Acid 50 mg.

ce) Vitamin E 25 I.U.

d) Caffeine 25 mg.

3. I find with respect to the products of respondent Love

Song Cosmetic Corp. (hereinafter “Love Song”) involved

in this proceeding (Sone or Passion Tasiets, SuPer Grn-

SENG TABLETS, SPANISH Fy Imitation, GINSENG AND Im1TAa-

TION SpaNisH Fy) that the advertisement in which they

are described (Ex. C-1(c) ) has a predominately sexual

orientation which, taken in its totality, makes the represen-

tation that such products are effective aphrodisiacs or sex-

ual stimulants. The various portions of the advertisement

which support this general finding are as follows:

“Love Song Products—an exciting, supercharged

sex life requires a full power body. For your sexual

pleasure here’s a fabulous new line of pleasure packed

marital aids, aphrodisiacs and stimulants to turn you

on and en and on!!!”

‘‘Love Song products will intensify your love life or

your money back.

17a

Appendix C—Decision of Administrative Law Judge.

“All Love Song products are unconditionally guar-

anteed.”

4. With respect to Sone or Passion Tasuets I find that

respondent Love Song makes the representations alleged

in the complaint, based on Finding of Fact 3, supra, and on

the following additional wording found in the portion of

the advertisement relating specifically to that product:

‘‘Guaranteed to make her hot”

“Activate, stimulate and glamorize your sex life”

‘Song of Passion is a unique blend of aphrodisiacs

and irritants***’’

5. With respect to Super Ginsenc Tastets I find that

respondent Love Song makes the representations alleged

in the complaint based on Finding of Fact No. 3, supra,

and on the following additional wording found in the

portion of the advertisement relating specifically to that

product:

“Release inhibitions—increase desire”

“The legendary root of virility”

“Tt has been used by the Orientals for over 5000

years to increase sexual virility and prolong life and

potency.”

6. With respect to Spanish Fry Imiration I find that

respondent Love Song makes the representations alleged

in the complaint based on Finding of Fact No. 3, supra,

and on the following additional wording found in the

portion of the advertisement relating specifically to that

product:

“Put her in the Mood”

18a

Appendix C—Decision of Administrative Law Judge.

“The Aphrodisiac Qualities of Spanish Fly Are

Legendary”

“Upon passage thru the body tiny particles of this

genuine imported spice effectively and safely stimulate

the sexual organs in both the male and female and

has the potential to produce real excitement. Folklore

has it that Don Juan has used the ingredients in these

capsules to help him gain his legendary reputation

as a super stud.”

7. With respect to GinsenG anp Imitation SpanisH FLy

I find that respondent Love Song makes the representations

alleged in the complaint based on Finding of Fact No. 3,

supra, and the following additional wording found in the

portion of the advertisment relating specifically to that

product:

“Guaranteed to make her hot”

“Do you measure up? You can. Unbelievable in

their effect”

“The Chinese have used it as an aphrodisiac for

over 5000 years.”

“Ginseng is sometimes called ‘The Turn-on Root’”

“To quote S. Steingold ‘***if you think you have

been turned on before you ain’t seen nothing yet.’ Try

our Ginseng with Spanish Fly Capsules and find out

what he means”

8. I find with respect to the products of respondent,

Original Cosmetics Products, Inc., (hereinafter “Original

Cosmetics”) involved in this proceeding (JunGLE Passion

Caps, Att AmericAN Booster Caps witH VirTamMin KE,

AvTHENTIC TuRNERA ApHROpDISIACA Caps, Drive Her WILD

Or or Cream, and Instant Erection O11) that the adver-

tisement in which they are described (Ex. C-1(b), R-1) has

19a

Appendix C—Decision of Administrative Law Judge.

a predominantly sexual orientation which, taken in its

totality, makes the representation that such products are

effective aphrodisiacs or sexual stimulants. The various

portions of the advertisement which support this general

finding are as follows:

“Exciting New Items for a More Able and Desirable

You”

“More Legendary Aphrodisiacs With the Placebo

Qualities Doctors Have Used for Years”

9. With respect to Junete Passion Caps, I find that

respondent Original Cosmetics makes the representations

alleged in the complaint based on Finding of Fact No. 8,

supra, and the following ‘additional wording found in the

portion of the advertisement relating to that product:

‘‘* * * designed to bring out the ‘Beast in You.’

Students of aphrodisiacs could write volumes about

this product. Try it and write your own testimonial.”

10. With respect to ALL American Booster Tass WitTH

Viramin E, I find that respondent Original Cosmetics

makes the representations alleged in the complaint based

on Fnding of Fact No. 8, swpra, and the following addi-

tional wording found in the portion of the advertisement

relating to that product:

‘*It is combined with a general cerebral and body

stimulant so that it will work even better than our old

formula to do the job you want it to. If you are suf-

fering from a lack of any of the above vitamins or

are just feeling tired and sluggish when you should

be roaring like a lion—this product may be just for

you.’’

20a

Appendix C—Decision of Administrative Law Judge.

11. With respect to AurHENtTIC TURNERA APHRODISIACA

Caps, I find that respondent Origina] Cosmetics makes the

representations alleged in the complaint based on Finding

of Fact No. 8, supra, and the following additional wording

found in the portion of the advertisement relating to that

product:

‘«* * * designed to react upon the body in approx-

imately 1 hour. The name Turnera Aphrodisiaca

stands on its own.’’

12. With respect to Drive Her Wiz oil or cream, I find

that respondent Original Cosmetics makes the representa-

tions alleged in the complaint based on Finding of Fact

No. 8, supra, and the following additional wording found

in the portion of the advertisement relating to that prod-

uct:

‘‘An amazing environmental sensitizer * * *’’

‘‘This new and amazing product is for women who

are having sexual relations and not getting the utmost

enjoyment that sex can give you. It will also help

those who are contemplating sexual relations but are

too frigid to try.’’

13. With respect to Instant Erection Om, I find that

respondent Original Cosmetics makes the representations

alleged in the complaint based on Finding of Fact No. 8,

supra, and the following additional wording found in the

portion of the advertisement relating to that product:

“Instant Erection Oil is scientifically formulated to

help you get an instant erection when rubbed on the

head of the penis * * *. Not only should it give an

instant erection, it should cause the penis to get harder

and larger for a prolonged period of time * * * this new

and amazing product is for men who have tried every-

Zia

Appendix C—Decision of Administrative Law Judge.

thing else and have had no luck. No longer need you

let the best of joys that life has to offer pass you by.

With this fantastic product you too can now stand

up and be counted.”

14. Complainant relied on the testimony of Robert S.

Hotchkiss, M.D., to support its allegations of misrepre-

sentations. Dr. Hotchkiss possessed outstanding qualifi-

eations to testify in this proceeding (Ex. C-6, Curriculum

vitae) being a specialist in urology and since 1949, Pro-

fessor and Chairman, Department of Urology, New York

University School of Medicine and Postgraduate Medical

School. Urology is that branch of surgery and medicine

dealing with conditions of the genitourinary tract.

Dr. Hotchkiss has discussed matters relating to sexuality

with other urologists, instructs first and second year medi-

cal students on sexual relations in terms of sexual adjust-

ment and correction of difficulties such as impotence and

frigidity, and keeps abreast of current literature and

developments in the fields of sex and sexuality (Tr. 51).

According to Dr. Hothkiss, the great majority of sexual

complaints and problems are psychogenic, rather than or-

ganic, in origin (Tr. 21, 22, 23). The only substances con-

sidered by Dr. Hotchkiss to constitute effective aphrodi-

siacs, or sexual stimulants, are testosterone, for males suf-

fering from an insufficiency of male hormones, and drugs

used for the treatment of thyroid conditions which may in-

hibit sexual performance and capacity (Tr. 24). Dr. Hotch-

kiss, with all his experience in the field of sexual problems,

knew of no aphrodisiac for persons whose impotence or

other sexual problems, are not organically caused (Tr. 25).

15. It was Dr. Hotchkiss’ opinion that the products in-

volved in this proceeding do not have the efficacies repre-

sented in the advertisements as alleged in the complaint.

Acording to Dr. Hotchkiss, the only ingredients contained

22a

Appendia C—Decision of Administrative Law Judge.

in any of the products which have a generally recognized

medical or therapeutic value are the methyl salicylate (oil

of wintergreen) found in Drive Her Wiutp Cream and In-

stant Erection Or, and vitamins A and C and caffeine,

present in Att American Booster Tass. Ingestion of the

vitamins could have a stimulating effect on the sexual viril-

ity and performance of a person with a clinically demon-

strable deficiency of such vitamins. In the absence of such

a deficiency they would have no such effect (Tr. 45). In

the opinion of Dr. Hotchkiss, the vitamins will not have an

aphrodisiac effect (Tr. 76). Methyl salicylate is used in

medical practice in the treatment of sore joints or muscles.

None of the products, in his opinion, constitute effective

aphrodisiacs, sexual stimulants, or valid products to in-

crease sexual performance, capacity, or enjoyment. With

respect to Drive Her Witp Ow and Instant Erection

Cream, Dr. Hotchkiss was of the opinion that the recom-

mended method of application, but not the ingredients

themselves might produce sexual stimulation (Tr. 80, 81, 84,

86, 87).

16. Dr. Hotchkiss expressed the opinion that the know]-

edge of a person that he is ingesting a placebo (a substance

with no medicinal value) would destroy the real purpose of

the placebo, which is a favorable psychological reaction to

the substance (T'r. 108, 109).

17. Dr. Hotchkiss admitted a degree of bias against the

drugs involved in this proceeding as worthless for the pur-

poses represented by respondents and in being “pushed on

the public who is paying for them,” but attempted to bal-

ance such bias with honest answers to the questions put to

him (Tr. 117, 118).

18. I find that the opinions expressed by Dr. Hotchkiss

with regard to the matters at issue in this proceeding coin-

23a

Appendix C—Decision of Administrative Law Judge.

cide with the consensus of informed medical and scientific

opinion in the field of urology (Tr. 51, 52). |

19. Dr. Joseph Edward Davis, a well-qualified urologist,

testified for respondent. The net of Dr. Davis’ testimony

with respect to the various products involved was that he

could not state that they were misrepresented in respond-

ents’ advertising because he lacked knowledge, based on

scientific evidence, as to whether the products would pro-

duce the results represented (Tr. 41-43). Dr. Davis does

not knowingly give placebos to patients in his practice (Tr.

33) and, the same as Dr. Hotchkiss, has never prescribed

any of the products involved in this proceeding to increase

sexuality, and does not know any doctors who use the sub-

stances involved (Tr. 40, 41, 101).

Conc.usion or Law

1. Respondents are engaged in a scheme or device for

obtaining money or property through the mails by means

of false representations within the meaning of 39 U.S.C.

§3005.

2. I reach the foregoing conclusion ir. spite of the word-

ing respondents employ in their advertisements, such as

“legendary aphrodisiacs” and “placebo qualities”, which

might alert the buying public to the lack of efficacy of these

products were it to study carefully and weigh each such

word. But as the Court said in Cates v. Hederlein, 189

F. 2d 369 at p. 373:

“The buying public does not ordinarily carefully

study or weigh each word in an advertisement and

the ultimate impression upon the mind of the reader

arises not only from what is said but also all of

that which is reasonably implied. Aronberg v. Federal

24a

Appendix C—Decision of Administrative Law Judge.

Trade Commission, 7 Cir., 1382 F. 2d 165, 167. The

important criterion is the net impression which the

advertisement is likely to make upon the purchasers

to whom the advertsement is directed. Charles of

the Ritz Distributors Corp. v. Federal Trade Commis-

sion, 2 Cir., 143 F. 2d 676, 680. It has been held that

even if an advertisement is so worded as not to make

an express misrepresentation, nevertheless if it is

artfully designed to mislead those responding to it,

the mail fraud statutes are applicable. Durland v.

United States, 161 U.S. 306, 313, 16 S. Ct. 508, 40 L.Ed.

709; MeCarthy v. United States, 2 Cir., 187 F. 117.”

3. Respondents advertisements make the materially

false representations found above and will be so understood

by the average reader. See Donaldson v. Read Magazine,

333 U.S. 178, 179 (1948).

4. Respondents’ argument that complainant was _ re-

quired to prove the alleged lack of efficacy of the products

involved and to support its expert medical testimony by

experimentation or testing is not well taken. The general

medical and pharmacological knowledge of complainant’s

medical witness was a sufficient basis for his expert medical

opinion. Charles of the Ritz Dist. Corp. v. Federal Trade

Com’n, 143 F. 2d 676, 678, 679. See also Research Labora-

tories v. United States, 167 F. 2d 410, 416, 417; Skinny

Suit, P.S. Docket No. 3/44, Postal Service Decision, Febru-

ary 19, 1976; Rogers Laboratories, Inc., P.S. Docket No.

4/123, Postal Service Decision, April 14, 1976; Schiffahrts

Laboratories, P.S. Docket No. 3/193, Initial Decision, April

26, 1976.

5. The opinions expressed by complainant’s expert as

to lack of efficacy of these products were not substantially

ne een

25a

Appendix C—Decision of Administrative Law Judge.

controverted by those of respondent’s medical expert whose

testimony amounted to profession of a lack of knowledge

as to what, if any, efficacy these products might have as

aphrodisiacs or sexual stimulants.

6. The proposed findings of fact and conclusions of law

submitted by the parties have been considered and adopted

to the extent indicated. Otherwise, they are denied because

they are not supported by the evidence, are contrary to the

evidence, or because they are irrelevant or immaterial to

the decision.

7. Accordingly, an order pursuant to 39 U.S.C. §3005 in

the form attached should be issued against respondents.

Quentin E. Grant

Administrative Law Judge

(SEAL)

JUDICIAL OFFICER

Wasuineton, DC 20260

Orver No. Date:

To THE Postmaster at New York, New York 10001

Satisfactory evidence has been presented to the Postal

Service in the case identified below by docket number that

OricinaL Cosmetic Propucts, Inc., P.O. Box 480; Love

Sone Cosmetic Corp., P.O. Box F; Love Sona Cosmazrtics,

P.O. Box 498 Cooper Station, all at New York, New York

26a

Appendix C—Decision of Administrative Law Judge.

and their agents and representatives (hereinafter the

“Respondent”) are engaged in conducting a scheme or

device for obtaining money or property through the mails

by means of false representations in violation of 39 U.S.

Code 3005 (formerly 39 U.S.C. 4005) with respect to the fol-

lowing products: Love Sone Sone or Passion Tasets ; Love

Sone Super Ginsenc; Love Sone Imrration Spanisn Fry;

OrnrentaL Love Imiration Spanish Fry w/GInsenG;

OrnrentaL Love Junaite Passron; OrieinaL Love TuRNERA

ApxropisiacaA; Drive Her Witp Or; Instant Erection

Om; Att American Booster Caps.

Now, therefore, pursuant to authority vested in the United

States Postal Service, and by it delegated to me, I hereby

forbid your payment of any Postal Money Order drawn to

the order of the Respondent unless you are satisfied that

such order does not relate to the above described activities.

Further, you are directed to inform the remitter of any

Postal Money Order, the payment of which is forbidden

by this Order, that the amount thereof will be refunded

upon presentation to you of the original order or a dupli-

cate thereof issued by the Postal Service.

You are further directed to hold for not less than 48 hours

(exclusive of days during which your office is not open

to the public) all mail addressed to the Respondent,

whether registered or not, except for any mail, which you

determine, by reference to the face of its wrapper, is

unrelated to the above described activities. During the 48

hour retention period Respondent shall be permitted to

examine the retained mail in your presence or the presence

of a postal employee designated by you and to receive any

mail which (1) is not connected with the above described

activities, or (2) is mail requesting a refund or represent-

ing a return of merchandise connected with such activities.

re eS en

27a

Appendix C—Decision of Administrative Law Judge.

Following such examination by Respondent or the passage

of 48 hours, you are directed to write plainly or stamp

the words “Return To Sender; Order Isswed Agavnst

Addressee For Violation of False Representation Law”

upon the outside of all mail which the Respondent was

not permitted to receive and to return such mail to the

post offices from which it was mailed for return to the

senders. If the outside of the mail fails to contain infor-

mation necessary to permit return to the sender, the mail

shall be disposed of under the postal regulations applicable

to undeliverable matter.

PS Docket No. 4/120; G.C. 237-75-F

Judicial Officer

APPEARANCES FOR COMPLAINANT:

™

APPBARANCES FOR RESPONDENT:

28a

APPENDIX D

Opinion and Order of Judicial! Officer.

SEAL

JupioraL Orricer

Washington, DC 20260

P.S. Docket No. 4/120

In the Matter of the Complaint Against

OntarnaL Cosmetic Propucts, Ine.

P. O. Box 480

and

Love Sona Cosmetic Corp.

P. O. Box F

New York, New York 10011

and

Love Sono Cosmetics

P. O. Box 498 Cooper Station

New York, New York 10003

Esq.

New York, New York

H. Richard Hefner, Esq.

Law Department

U. S. Postal Service

Washington, D.C.

Herbert Monte Levy,

29a

Appendix D—Opinion and Order of Judicial Officer.

PostaL Service Decision

The Respondent identified in the caption above has taken

a timely appeal to the undersigned under the provisions of

39 Code of Federal Regulations, Part 952, from the Initial

Decision issued by Administrative Law Judge Quentin E.

Grant, in which it is recommended that a mail stop order

he issued against Respondent to protect the public against

various false representations in Respondent’s advertising.

The case involves nine different products all found by

Judge Grant to be falsely represented as effective aphro-

disiacs or sexual stimulants.

Respondents’ Appeal Brief takes issue with most of the

findings that the alleged representations were made and

with all of the findings that the representations are false.

Respondent also contends that it was denied due process in

not being permitted to reopen the hearing for presentation

of additional evidence and further that the decision vio-

lates its rights under the First Amendment to the U. S.

Constitution.

Judge Grant’s Initial Decision amply and logically de-

tails the basis, in each instance, for his findings that the

representations alleged in the complaint are made in fact

in the Respondent’s advertising material. Respondent has

taken each advertisement and attempted in its Brief to

negate the alleged representations by offering its view of

the proper interpretation to be given to the claims made,

The arguments are identical to those made in the Brief

filed with Judge Grant. I have carefully considered these

arguments. They are, in main, spurious. Judge Grant’s

findings that the representations charged in the complaint,

and set forth in his decision, are made by the Respondent's

advertising material, are clearly correct and Respondent's

exceptions to those findings are disallowed,

30a

Appendix D—Opinion and Order of Judicial Officer.

Respondent’s exceptions to Judge Grant’s findings of ma-

terial falsity are premised upon what it considers fatal de-

ficiencies in Complainant’s proof, attacking principally the

competency and credibility of the testimony of Complain-

ant’s expert medical witness, Dr. Robert S. Hotchkiss.

Both points were raised to Judge Grant who found Dr.

Hotchkiss eminently qualified to express the consensus of

informed medical and scientific opinion and fully credible

in his testimony regarding the issues here involved. My

review of the record satisfies me that Judge Grant was

correct in this judgment. Respondent’s arguments with

respect to inconsistencies in testimony and bias are not per-

suasive in the light of the full testimony. The essence of

Respondent’s position on the proof is, to summarize the

position of its medical expert, Dr. Joseph Edward Davis,

that to prove a particular item is not an effective aphrodi-

siac or sexual stimulant, controlled and expensive experi-

mentation would be necessary over a long period of time,

perhaps five to ten years (Tr. 45).

Respondent argues that American School of Magnetic

Healing v. McAnnulty, 187 U.S. 94 (1914), controls in this

situation. That case involved the business of teaching the

practical science of healing through the exercise of the

human mind rather than medicines. It held that there

could be found no intent to defraud the public, an ele-

ment then required, but now excised from the postal false

representation law, when there were two prevailing schools

of respectable thought on the subject. Commingled with

Respondent’s contention of prerequisite testing, put amply

to rest by the cases cited by Judge Grant in his conclu-

sion of law number 4, and its contention of the “placebo”’

effect of its products, the argument is seen to be all form

and no substance. Nor does Respondent’s money-back

guarantee make all things whole. See Howard v. Cassidy,

162 F.Supp. 568 (E.D.N.Y. 1958), and cases cited therein.

See also Jso-Tensor, P.S. Docket No. 3/30 (1975).

31a

Appendix D—Opinion and Order of Judicial Officer.

The contention regarding the “placebo” effect merits

some comment, however, if for no other reason than that

Respondent urges it was a denial of due prozess for Judge

Grant not to reopen the hearing to take additional evi-

dence on that subject. The record in this case shows Re-

spondent was given every opportunity for a full and fair

hearing including a number of extensions the effect of

which necessarily has prolonged the ultimate decision.

Its request to reopen the hearing, made at the time briefs

were filed with Judge Grant some seven weeks after the

hearing, was to present testimony with respect to the

effectiveness of “placebos.’’ Even if it be assumed that

Respondent’s further evidence would show that with re-

spect to placebo qualities the stronger the representation

as to the powers of the item, the stronger will the placebo

effect be, there is inherent in the entire argument the

existence of false representations. From the fact that a

doctor may treat a patient with a placebo, where medi-

cally indicated, and attain results therefrom it does not

follow that a commercial enterprise may sell a product on

the basis of false claims of its effectiveness and justify

the practice on the theory that the customer may conceiv-

ably thereby overcome a possible psychological obstacle.

The tool is deception and deception for profit. This the

postal false representation law prohibits. The request to

reopen was properly denied and Respondent’s exception

to that denial is disallowed.

Respondent’s First Amendment contention relies upon

Virginia State Board of Pharmacy v. Virginia Citizens

Consumer Council, —— U.S. ——, 446 LW 4686, decided

May 24, 1976. That case, however, is no help to Respondent

who contends it should be read to protect “deceptive or

misleading” advertising as distinguished from “false”

advertising citing page 4693 of the Court’s opinion to the

effect that “Untruthful speech, commercial or otherwise,

has never been protected for its own sake * * *. Obviously

32a

Appendix D—Opinion and Order of Judicial Officer.

much commercial speech is not provably false or even

wholly false, but only deceptive or misleading.” The very

next sentences of the Supreme Court opinion, omitted in

Respondent’s Brief, state “We foresee no obstacle to a

State dealing effectively with this problem. The First

Amendment, as we construe it today, does not prohibit the

State from insuring that the stream of commercial infor-

mation flows cleanly as well as freely.” The footnote

referenced above goes into greater and equally lucid detail

which makes it crystal clear that deceptive commercial

advertising cannot seek effective cover under the First

Amendment. It is quoted in full here:

“24. In concluding that commercial speech enjoys

First Amendment protection, we have not held that it

is wholly undifferentiable from other forms. There

are commonsense differences between speech that does

‘no more than propose a commercial transaction’

Pittsburgh Press Co. v. Pittsburgh Comm’n on Human

Relations, 413 U.S. at 385 and other varieties. Even

if the differences do not justify the conclusion that

commercial speech is valueless, and thus subject to

complete suppression by the State, they nonetheless

suggest that a different degree of protection is neces-

sary to insure that the flow of truthful and legitimate

commercial information is unimpaired. The truth if

commercial speech, for example, may be more easily

verifiable by its disseminator than, let us say, news

reporting or political commentary, in that ordinarily

the advertiser seeks to disseminate information about

a specific product or service that he himself provides

and presumably knows more about than anyone else.

Also, commercial speech may be more durable than

other kinds. Since advertising is the sine qua non of

commercial profits, there is little likelihood of its being

chilled by proper regulation and foregone entirely.

33a

Appendix D—Opinion and Oréer of Judicial Officer.

Attributes such as these, the greater objectivity

and hardiness of commercial speech, may make it less

necessary to tolerate inaccurate statements for fear

of silencing the speaker. Compare New York Times

Co. v. Sullivan, supra, with Dun & Bradstreet, Inc. v.

Grove, supra. They may also make it appropriate to

require that a commercial message appear in such a

form, or inelude such additional information, warnings

and disclaimers, as are necessary to prevent its being

deceptive. Compare Mtami Herald Publishing Co. v.

Tornillo, 418 U.S. 241 (1974), with Banzhaf v. FCC,

132 U.S. App. D. C. 14. 405 F. 2d 1082 (1968), cert.

denied, sub nom. Tobacco Institute, Inc. v. FCC, 396

U.S. 842 (1969). Compare United States v. 95 Barrels

of Vinegar, 265 U.S. 488, 443 (1924) (‘It is not difficult

to choose statements, designs and devices which will

not deceive.’) They may also make inapplicable the

prohibition against prior restraints. Compare New

York Times Co. v. United States, 403 U.S. 713 (1971),

with Donaldson v. Read Magazine, 333 U.S. 178, 189-

191 (1948); FTC v. Standard Education Society, 302

U.S. 112 (1937); #. F. Drew & Co. v. FTC, 235 F.2d

735, 739-740 (CA2 1956), cert. denied, 352 U.S. 969

(1957).”

Likewise Respondent in an effort to raise its advertising

claims to constitutional stature quotes Mr. Justice Stew-

art’s concurring opinion out of context to the effect that—

‘«* * * But since it is a cardinal principle of the First

Amendment that ‘government has no power to restrict

expression, because of its message, its ideas, its sub-

ject matter, or its content,’ the Court’s decision calls

into immediate question the constitutional legitimacy

of every state and federal law regulating false or de-

ceptive advertising.”

34a

Appendix D—Opinion and Order of Judicial Officer.

Mr. Justice Stewart’s very next sentence reads ‘‘I write

separately to explain why I think today’s decision does not

preclude such governmental regulation.” In fact, Mr. Jus-

tice Stewart goes on to state at pages 4694-5:

“The principles recognized in the libel decisions sug-

gest that government may take broader action to pro-

tect the public from injury produced by false or decep-

tive price or product advertising than from harm

caused by defamation. In contrast to the press, which

must often attempt to assemble the true facts from

sketchy and sometimes conflicting sources under the

pressure of publication deadlines, the commercial ad-

vertiser generally knows the product or service he

seeks to sell and is in a position to verify the accu-

racy of his factual represcatations before he dissemi-

nates them. The advertiser’s access to the truth about

his product and its price substantially eliminates any

danger that governmental regulation of false or mis-

leading price or product advertising will chill accurate

and nondeceptive commercial expression. There is,

therefore, little need to sanction ‘some falsehood in

order to protect speech that matters.’ ”

ConcLUSION

All of Respondent’s exceptions to the Initial Decision are

found without merit and must be disallowed. The Initial

Decision is accordingly hereby affirmed and a remedial

mail stop order under 39 U.S.C. § 3005 is being issued con-

temporaneously with this decision.

Epwarp F. Lussier

Edward F. Lussier

Judicial Officer

35a

Appendix D-—Opinion and Order of Judicial Officer.

JUDICIAL OFFICER

Wasuineton, DC 20260

Orpver No. 76-70 Date: August 23, 1976

To THE Postmaster aT NEw York, New York 10001

Satisfactory evidence has been presented to the Postal

Service in the case identified below by docket number that

OricinaL Cosmetic Propucts, Inc. at P. O. Box 480, New

York, NY 10011; Love Sone Cosmetic Corp. at P. O. Box F,

New York, NY 10011; and Love Sone Cosmetics at P. O.

Box 498 Cooper Station, New York, NY 10003 and their

agents and representatives (hereinafter the “Respondent”)

are engaged in conducting a scheme or device for obtain-

ing money or property through the mails by means of false

representations in violation of 39 U.S. Code 3005 (formerly

39 U.S.C. 4005) with respects to the sale of products called:

‘ Song of Passion Tablets, Super Ginseng Tablets, Spanish

Fly Imitation, Ginseng and Imitation Spanish Fly, Jungle

Passion Caps, All American Booster Caps with Vit. E, Au-

thentic Turnera Aphrodisiaca Caps, Drive Her Wild, In-

stant Erection Oil.

Now, therefore, pursuant to authority vested in the

United States Postal Service, and by it delegated to me, I

hereby forbid your payment of any Postal Money Order

drawn to the order of the Respondent unless you are satis-

‘fied that such order does not relate to the above described

activities. Further, you are directed to inform the re-

mitter of any Postal Money Order, the payment of which

is forbidden by this Order, that the amount thereof will

be refunded upon presentation to vou of the original order

or a duplicate thereof issued by the Postal Service.

You are further directed to hold for not less than 48

hours (exclusive of days during which your office is not

36a

Appendix D—Opinion and Order of Judicial Officer.

open to the public) all mail addressed to the Respondent,

whether resigstered or not, except for any mail, which

you determine, by reference to the face of its wrapper,

is unrelated to the above described activities. During the

48 hqur retention period Respondent shall be permitted to

examine the retained mail in your presence or the presence

of a postal employee designated by you and to receive any

raail which (1) is not connected with the above described

activities, or (2) is mail requesting a refund or represent-

ing a return of merchandise connected wtih such activi-

ties.

Following such examination by Respondent or the passage

of 48 hours, you are directed to write plainly or stamp the

words “Return To Sender; Order Issued Against Ad-

dressee For Violation of False Representation Law” upon

the outside of all mail which the Respondent was not per-

mitted to receive and to return such mail to the post offices

from which it was mailed for return to the senders. If the

outside of the mail fails to contain information necessary

to permit return to the sender, the mail shall be disposed

of under the postal regulations applicable to undeliverable

matter.

PS Docket No. 4/120; G.C. 237-75-F

Epwarp F., Lussier

Edward F. Lussier

Judicial Officer

37a

Appendix D—Opinion and Order of Judicial Officer.

(SEAL)

JUDICIAL OFFICER

Wasuinaton, DC 20260

Orpver No. 76-70 (Supplement) Date: August 25, 1976

To THe Postmaster at New York, New York 10001

On August 23, 1976, Order No. 76-70 was issued which pro-

hibited the delivery of mail to, and the payment of money

orders made out in favor of, OniatnaL Cosmetio Propucts,

Inc. at P.O. Box 480, New York, NY 10011; Love Sona

Cosmetic Corp. at P.O. Box F, New York, NY 10011; and

Love Sone Cosmetics at P.O. Box 498 Cooper Station, New

York, NY 10003, and their agents and representatives if

such mail related to the sale of products called:

Song of Passion Tablets All American Booster Caps

Super Ginseng Tablets with Vit. E

Spanish Fly Imitation Authentic Turnera Aphro-

Ginseng and Imitation disiaca Caps

Spanish Fly Drive Her Wild

Jungle Passion Caps Instant Erection Oi}!

Counsel for the above-named Respondents has indicated

that within two weeks from the date of this Order he

will seek an injunction restraining the Postal Service from

the enforcement of Order No. 76-70. If the petition for

injunction is not filed on or before September 8, 1976,

Order No. 76-70 shall remain in full force and effect. If

the petition for injunction is filed on or before September

8, 1976, mail addressed to the above-named Respondents

will be treated as follows:

(1) Mail containing orders for products other than

those listed above will be delivered to the Respondents,

their agents or representatives;

(2) Mail addressed to the above-named Respond-

ents containing orders only for the products listed

38a 39a

Appendix D—Opinion and Order of Judicial Officer. Appendix D—Opinion and Order of Judicial Officer.

above is to be withheld in the post office and not de- SEAL

livered to the Respondents, their agents or represen- JUDICIAL OFFICER

ee Wasuineton, DC 20260

(3) Mail addressed to the above-named Respondents

containing orders for products not named above and September 8, 1976

one or more products that are named above will be P.S. Docket No. 4/120

delivered to the Respondents, their agents or repre-

sentatives if, and only if, the Respondents (a) pur- +

chase a money order in the amount of the cost of the In the Matter of the Complaint Against

above-listed product or products ordered and (b) mail

the money order to the customer by whom the order OrieinaL Cosmetic Propvucts, Inc.

was placed. P. O. Box 480

and

This order will remain in force unless and until it is Love Sone Cosmetic Corp.

modified by the Judicial Officer or by the order of a court | P. O. Box F

of competent jurisdiction. at

New York, New York 10011

(Signed) William A. Duvall q

Wituam A. DuvaLi ”

Acting Judicial Officer | Love Sone CosMETICs

, P. O. Box 498 Cooper Station

PS Docket No. 4/120; G.C. 237-75-F at

New York, New York 10003

ORDER

The supplement dated August 25, 1976, to Order No.

76-70 granted Respondent until September 8, 1976, in which

to file a petition for injunction after which certain action

as specified therein will be taken. The supplement is

hereby amended to extend the time from September 8,

1976, until September 15, 1976.

(Signed) Edward F. Lussier

Edward F. Lussier

Judicial Officer

40a

Appendix D—Opinion and Order of Judicial Officer.

SEAL

JUDICIAL OFFICER

Wasuinoron, DC 20260

September 24, 1976

P.S. Docket No. 4/120

s+.

In the Matter of the Complaint Against

OriainaL Cosmetic Propucts, Ine.

P. O. Box 480

and

Love Sone Cosmetic Corp.

P. O. Box F

New York, New York 10011

and

Love Sone CosMEtTICcs

P. O. Box 498 Cooper Station

New York, New York 10003

ORDER

Counsel for Respondent in the above-entitled case has

formerly advised that a petition for an injunction has been

filed in the United States District Court for the Southern

District of New York on September 15, 1976, under Index

No. 76 Civ. 4111.

Accordingly, the procedure set forth in the Supplement

dated August 25, 1976, to mail stop order No. 76-70 is

hereby placed into effect until modified by the undersigned

or by an order of a court of competent jurisdiction.

(Signed) Edward F. Lussier

Edward F. Lussier

Judicial Officer

ss an ie siete

4la

APPENDIX E

Magistrate’s Recommendation.

UNITED STATES DISTRICT COURT

Soutruern District or New York

76 Civ. 4111 (GLG)

dé.

OricrinaL Cosmetic Propucts, Inc.

and Love Sone Cosmetic Corp.,

Plaintiffs,

—against—

Joun Srracwan, Postmaster at

New York City, New York, and

Unirep Stares Postau Service,

Defendants.

é,

By order of the Honorable Gerard L. Goettel, District

Judge, this case was referred to the undersigned to review

the administrative record on cross motions for summary

judgment, Rule 56, Fed. R. Civ. P., which seek review of

a U.S. Postal Service (“Stop-Mail”) Order issued pursuant

to 28 U.S.C. $1339. ;

An administrative decision of the U.S. Postal Service

found that the plaintiffs have been engaged in a scheme to

obtain money through the mails by means of false repre-

sentations in violation of 39 U.S.C. §3005' with respect to

the sale of the following products:

139 U.S.C. § 3005 provides, pertinently:

[False representations; lotteries]

(footnote continued on following page)

42a

Appendix E—Magistrate’s Recommendation.

Song of Passion Tablets, Super Ginseng Tablets,

Spanish Fly Imitation, Ginseng and Imitation Spanish

Fly, Jungle Passion Caps, All American Booster Caps

. with Vit. E, Authentic Turnera Aphredisiaca Caps,

Drive Her Wild, and Instant Erection Oil.

The Postal Service alleged the following misrepresenta-

tions:

1) Express and implied representation of Song of Passion

Tablets, Spanish Fly Imitation, Jungle Passion Caps, and

Authentic Turnera Aphrodisiaca Caps as effective aphro-

disiacs or sexual stinmulants;

2) Express and implied representation of Super Ginseng

Tablets as an effective means of increasing and prolonging

sexual virility and potency, and of All American Booster

Tabs with Vitamin KH, as an effective means of increasing

sexual virility and performance;

3) Expressly and impliedly represented that Ginseng and

(footnote continued from preceding page)

(a) Upon evidence satisfactory to the Postal Service that

any person is engaged in conducting a scheme or device for

obtaining money or property through the mail by means of

false representations. . . ., the Postal Service may issue an

order which—

(1) directs the postmaster of the post office at which mail

arrives, addressed to such a person or to his representative, to

return such mail to the sender appropriately marked as in vio-

lation of this section, if the person, or his representative, is

first notified and given reasonable opportunity to be present

at the receiving post office to survey the mail before the post-

master returns the mail to the sender; and

(2) forbids the payment by a postmaster to the person or

his representative of any money order or postal note drawn

to the order of either and provides for the return to the re-

mitter of the sum named in the money order or postal note.

(BD) scan

43a

Appendix E—Magistrate’s Recommendation.

Imitation Spanish Fly would effectively heighten and pro-

long sexual performance, capacity and enjoyment;

4) Expressly and impliedly represented that Drive Her

Wild would heighten sexual enjoyment and cause frigid

women to engage in sexual intercourse ;

5) Expressly and impliedly represented that Instant Eree-

tion Oil would instantly and for prolonged periods of time

enable a man, who was otherwise unable, to achieve an

erection,

As a result of this decision an order was issued pursuant

to 39 U.S.C. §3005 prohibiting delivery of mail to, and

payment of Postal Service money orders in favor of, plain-

tiffs if such mail relates to the sale of the named products.

Background

In November 1975, the Postal Service instituted an

administrative proceeding charging that plaintiffs’ adver-

tisements for the above nine products were materially

false.

The administrative hearing began on February 18, 1976,

in New York City,” where the Postal Service introduced

evidentiary exhibits and the testimony of two witnesses:

(iene McHale, a postal inspector, and Robert S. Hotchkiss,

M.D., head of Urology at New York University School of

Medicine. Plaintiffs offered the testimony of Melvin

Cooper, the president of plaintiff corporations, and Joseph

Davis, M.D., head of Urology at New York Medical College.

Plaintiffs rested their case on March 19, 1976, and on

May 4, 1976 applied to re-open the proceedings. The

administrative law judge (ALJ) denied this motion and on

* It was moved to Washington, D.C. following a grant of plain-

tiffs’ December 17, 1975 motion for a change of venue over op-

position of the Postal Service. The Washington proceeding took

place on March 19, 1976.

44a

Appendix E—Magistrate’s Recommendation.

May 28, 1976 sustained the complaint. Plaintiffs then

exhausted their administrative remedies by appealing to

the Judicial Officer of the Postal Service, who affirmed the

decision.

Judicial Review

The questions presented are:

(1) whether there is merit to plaintiffs’ contention that

39 U.S.C. § 3005 is unconstitutional ;

(11) whether the administrative decision was supported

by substantial evidence; ard

(IIT) whether the Postal Service wrongly prejudiced plain-

tiffs’ case by refusing to re-open the hearing for further

evidence.

Plaintiffs recognize that the constitutionality of 39 U.S.C.

§ 3005 was upheld in Lynch v. Blount, 330 F. Supp. 689

(S.D.N.Y.), aff’d, 404 U.S. 1007 (1971). They contend,

however, that its constitutionality was newly placed in

question as a result of a 1976 decision of the United States

Supreme Court, Va. State Board of Pharmacy v. Va.

Citizens Consumer Council, Inc., 425 U.S. 748. They argue

that Va. State (decided four days prior to the decision of

the ALJ), which held that certain commercial advertising

is protected by the First Amendment, extends to the false

advertising enjoined by 39 U.S.C. § 3005.

This argument fails in that the Court in Va. State ex-

plieitly states that its opinion does not protect false com-

merical speech.

In concluding that commercial speech, like other

varieties, is protected, we of course do not hold that

— ee

45a

Appendia E—Magistrate’s Recommendation.

it can never be regulated in any way. Some forms of

commercial speech regulation are surely permissible.

... Untruthful speech, commercial or otherwise, has

never been protected for its own sake . Gertz v. Robert

Welch, Inc., 418 U.S. 323, 340 (1974); Konigsberg v.

State Bar, 366 U.S. 36, 49, and n. 10 (1961). Obviously,

much commercial speech is not provably false, or even

wholly false, but only deceptive or misleading. We

foresee no obstacle to a State’s dealing effectively with

this problem. The First Amendment, as we construe

it today, does not prohibit the State from insuring that

the stream of commercial information flow cleanly as

well as freely.

425 U.S. at 770-72 (footnote omitted).

The Court in Va. State elaborates, in a footnote, on the

issue of false commercial speech.

In concluding that commercial speech enjoys First

Amendment protection, we have not held that it is

wholly undifferentiable from other forms. There are

commonsense differences between speech that does ‘‘no

more than propose a commercial transaction,’’ Pitts-

burgh Press Co. v. Human Relations Comm’n, 413

U.S., at 385, and other varieties. Even if the differ-

ences do not justify the conclusion that commercial

speech is valueless, and thus subject to complete sup-

pression by the State, they nonetheless suggest that a

different degree of protection is necessary to insure

that the flow of truthful and legitimate commercial in-

formation is unimpaired. The truth of commercial

speech, for example, may be more easily verifiable by

its disseminator than, let us say, news reporting or

political commentary, in that ordinarily the advertiser

seeks to disseminate information about a specific prod-

46a

Appendia E—Magistrate’s Recommendation.

uct or service that he himself provides and presumably

knows more about than anyone else. Also, commercial

speech may be more durable than other kinds. Since

advertising is the sine qua non of commercial profits,

there is little likelihood of its being chilled by proper

regulation and foregone ‘entirely.

Attributes such as these, the greater objectivity and

hardiness of commercial speech, may make it less

necessary to tolerate inaccurate statements for fear of

silencing the speaker. (citations omitted). They may

also make it appropriate to require that a commercial

message appear in such a form, or include such addi-

tional information, warnings, and disclaimers, as are

necessary to prevent its being deceptive. (citations

omitted). 425 U.S. at 771-72 n.24.

In determining the second issue, this Court notes the

standard to be followed in reviewing a Postal Service de-

cision. See § U.S.C. §§ 704, 706 (1970).

“The power ... may not be interfered with by the

courts upless it has exceeded its authority or is pal-

pably wrong,....

“And even though the court, as the original trier of

the facts, might have reached a different conclusion, it

may not substitute its own judgment if there is sub-

stantial evidence to support the finding of fact made

by the [Postal Service]. Thus the court’s power to

upset a finding by the [Postal Service] that the mails

are being used in furtherance of a fraudulent scheme

is restricted to those instances where there is no sub-

stantial evidence reasonably to support [its] conclu-

77a

ers

47a

Appendix E—Magistrate’s Recommendation.

See also, Consolo v. Federal Maritime Commission,

383 U.S. 607, 620, 86 S. Ct. 1018, 1026, 16 L. Ed. 2d

131 (1966) (“. . . the possibility of drawing two

inconsistent conclusions from the evidence does

not prevent an administrative agency’s finding

from being supported by substantial evidence.”)

Unique Ideas, Inc. v. United States Postal Service,

416 F. Supp. 1142, 1144-45 (S.D.N.Y. 1976). (empha-

sis added).

This Court must decide whether there is substantial evi-

dence that the products to which the “Step-Mail” Order

applies were in fact advertised by means of “false” rep-

resentations, within the meaning of 39 U.S.C. § 3005.

A primary question is whether these products were rep-

resented as being effective aphrodisiacs or sexual stimu-

lants. The next issue is whether, if they were so re pre-

sented, this representation was false.

Plaintiffs contend that as parts of the advertisements in

issue included the words “legendary aphrodisiacs”, ‘so

called aphrodisiacs” and “legendary aphrodisiacs with the

placebo qualities doctors have used for years”, the prod-

ucts were not being represented as actual aphrodisiacs.’

In reviewing the circulars in question, this Court is

guided by the established legal precept that ‘‘[q]uestions

of fraud may be determined in the light of the effect ad-

vertisements would most probably produce on ordinary

minds,” Donaldson, Postmaster General v. Read Mag-

azine, Inc., 333 U.S. 178, 189 (1948).

*“Aphrodisiac” is defined in The Random House Dictionary

(unabridged ed, 1967) as

1, arousing sexual desire—n.

2. an aphrodisiac agent, as a drug.

48a

Appendix E—Magistrate’s Recommendation.

The Court is concerned with the ultimate impression

upon the potential consumer “not only from the total of

what is stated but also from what is reasonably implied.’’

N. Van Dyne Advertising Agency, Inc. v. United States

Postal Service, 371 F. Supp 1373, 1376 (S.D.N.Y. 1974).

The advertisements in issue convey the overall impres-

sion that the products are not merely legendary aphro-

disiacs or placebos. Although isolated passages within

the ads appears to mitigate the averments that the products

are actually aphrodisiacs, they do not effectively dispel the

general impression that the product will aid the buyer’s

sex life. ©

It is no defense that specific isolated portions of the

advertisement might have been true.

“It is not each separate word or a clause here and

there of an advertisement which determines its force,

but the totality of its contents and the impression

of the entire advertisement upon the populace . . .”

“'E]ven if an advertisement is so worded as not to

make an express misrepresentation, nevertheless, if

it is artfully designed to mislead those responding to

it, the mail fraud statutes are applicable.” Borg-

Johnson Electronics, Inc. vy. Christenberry, 169 F.

Supp. 746, 750-51 (S.D.N.Y. 1959).

An example of the artful construction of these adver-

tisements is found in the representations concerning

“Junate Passion Caps”—*‘*A combination of rufous cap-

sicum annum, damiana and serenoa serrulata designed to

bring out the ‘Beast in You’. Students of Aphrodisiacs

could write volumes about this product... .” The more

sophisticated reader would note the less obvious language

at page bottom, “All items on this sheet sold as novelties

only”, and page top, “More legendary aphrodisiacs with

49a

Appendiz E—Magistrate’s Recommendation.

the placebo qualities doctors have used for years”. But

the “Stop Mail” Statute was not designed solely for the

cynical or cautious.

In the instance of the mail fraud law, if the evidence

establishes that the scheme is directed toward the

gullible and the simple, the protection of the statute

is not to be denied them even though they do not

reach the level of the “ordinary mind.’’ The purpose

of the statute is to protect the unwary and unsuspect-

ing as well as the knowledgeable and worldly-wise —

those who are “trusting as well as the suspicious”.

The public includes ‘‘‘that vast multitude . . the

ignorant, the unthinking and the credulous.’” The

fact that informed and sophisticated persons would

readily recognize, laugh off, or even be amused by,

obviously false and absurd statements in an adver-

tisement does not detract from their power to de-

ceive the ignorant, gullible and less experienced.

Gottlieb v. Schaffer, 141 F. Supp. 7, 16 (S.D.N-Y.

1956) (footnotes omitted).

Although certain portions of these advertisements seem

to be of an equivocal or puffing nature,‘ the total message

to the reader is that the advertised products will increase

one’s sexual desire and prowess. For example, in boldest

type in one of the ads is the following:

“Love Song products—an exciting supercharged sex

life requires a full power body. For your sexual

pleasure here’s a fabulous new line of pleasure packed

marital aids, aphrodisiacs and stimulants to turn you

on and on and on!!!” (exh. C-1(e)).

*“This is not to say that stop orders will be upheld by the

courts whenever a person has resorted to a little exaggeration or

mere puffing. The false statement must be material and it must be

substantial to warrant the imposition of this drastic remedy.”

Lynch v. Blount, 330 F. Supp. 689, 693 (S.D.N.Y. 1971), aff'd, 404

U.S. 1007 (1972).

50a

Appendix E—Magistrate’s Recommendation.

Having concluded that substantial evidence supports the

allegation that plaintiffs advertised their prdoucts as ef-

fective sexual stimulants or aphrodisiacs, one must next

consider an issue which has prompted considerable his-

toric controversy and curiosity: whether offering these

products for sale as aphrodisiacs constitutes making a false

representation (within the meaning of 39 U.S.C. § 3005).

Both sides offered highly qualified expert testimony on

the issue of whether the ingredients in the subject prod-

ucts have aphrodisiac properties. One of plaintiff’s argu-

ments is that since both sides agreed (Tr. F. 117; M. 18)*

that a product’s effectiveness could not be determined

without double blind testing, which was not done here, the

“Stop-Mail” Statute was unconstitutionally applied.

Dr. Davis testified that experimentation was necessary

because the products might be shown to be effective sexual

stimulants. (Tr. M. 10, 13, 18-22).

However, experimentation was not a sine qua non for a

fiding by the ALJ in this case. In Reilly v. Pinkus, 338

U.S. 269, 274 (1949), it was held that the testimony of a

government expert could rest on his professional knowl-

edge. The Court there considered the contention that a

prior decision, relied upon by plaintiffs here, rendered

expert testimony incompetent in any case where there was

a failure to test the products.

We do not understand or accept it [the McAnnulty**

holding] as prescribing an inexorable rule that auto-

matically bars reliance of the fact-finding tribunal

upon informed medical judgment every time medical

°“F’". refers to the February Transcript and “M”. to the

March Transcript.

** American School of Magnetic Healing v. McAnnulty, 187 U.S.

94 (1902).

dla

Appendiz E—Magistrate’s Recommendation.

witnesses can be produced who blindly adhere to a

curative technique thoroughly discredited by reliable

scientific experiences. But we do accept the McAnnulty

decision as a wholesome limitation upon findings of

fraud under the mail statutes when the charges con-

cern medical practices in fields where knowledge has

not yet been crystallized in the crucible of experience.

For in the science of medicine, as in other sciences,

experimentation is the spur of progress. It would

amount to condemnation of new ideas without a trial

to give the Postmaster General power to condemn new

ideas as fraudulent solely because some cling to tradi-

tional opinions with unquestioning tenacity. Jd. at 274.

The clear reference to “new ideas” and “fields where

knowledge has not yet been crystalized in the crucible of

experience” renders the McAnnulty rationale inapplicable

to this case. As the expert testimony indicated, the sub-

stances in question have been considered by medical and

pharmacological texts since as early as 1907 (Tr. F.29, 30,

32-34, 71, 90, 92, 98, 101; M. 17, 31-32). The evidence indi-

cates sufficient exploration of the sexual stimulus value of

these ingredients to take it out of the area of “new ideas”

contemplated by McAnnulty and Reilly.

A further reading of Reilly demonstrates that the postal

order issued in the case at bar is justified in the face of

conflicting medical testimony on the issue.

In this case there is conflict, though slight, as to

whether kelp or iodine is valueless as a weight reducer.

But even if we assume that medical opinion is yet in

a state of flux on this question, we think that there

was sufficient evidence to support the findings that the

efficacy of the “Reducing Plan” as a whole was mis-

represented in respondent’s advertising. And we think

52a .

Appendiz E—Magistrate’s Recommendation.

those misrepresentations went beyond permissible

“puffing” of a seller’s wares; they were material repre-

sentations on which credulous persons, eager to reduce,

were entitled to rely. Despite subtle qualifying

phrases it is difficult to read these advertisements as

a whole without receiving the impression that, con-

trary to facts justifiably found by the Postmaster

General, kelp is a sure and drastic weight reducer;

that a user can reduce without uncomfortably restrict-

ing his usual ample diet of fattening foods; that the

treatment is absolutely safe and harmless to all ages,

to the ill and the well.

See Donaldson v. Read Magazine, 333 U.S. 178, 188-189.

These representations, if made with intent to decieve,*

fall squarely within the type which in Leach v. Carlile,

258 U.S. 138, were held to justifying findings of fraud.

Id. at 274-75.

Notwithstanding the evidence of the exploration of the

efficacy of plaintiffs’ products in noted texts used by experts

in the urological field, Dr. Davis testified that experimenta-

tion was necessary here because science has acquired new

techniques within the last ten years which may better deter-

mine whether such products actually have any sexual!

value.®

* It has been held that a finding of sctenter is unnecessary for

39 U.S.C. § 3005 purposes. See Lynch v. Blount, supra.

Q. * * * The fact that there is no reputable scientific litera-

ture that you could find in favor of any of these products as

affecting sexuality does not indicate to you that they have no

value?

A. It does not indicate to me that they might still—they

might still have value if appropriate studies were done that

have not been done.

(footnote continued on following page)

53a

Appendix E—Magistrate’s Recommendation. —

However, although Dr. Davis’ suggestion has merit, ex-

perimentation was not an absolute prerequisite to an ALJ

determination in this case.

The contention seems to be that even the testimony of

the most experienced medical experts can never rise

above a mere “opinion” unless the expert has made

actual tests of the drug to determine its effects in re-

lation to the particular representations alleged to be

false. The McAnnulty holding did not go so far.

Reilly, supra, at 274.

Both physicians’ opinions rested on their general profes-

sional knowledge. Dr. Hetchkiss relied on an established

body of medical and pharmacological literature (e.g., U.S.

Dispensary, U.S. Pharmacopoeia) in coneluc ng that plain-

tiffs’ products were incapable of effecting the claimed re-

(footnote continued from preceding page)

Q. By and large, these are all substances which have been

with us for generations or centuries, isn’t that true?

A. Yes, sir.

Q. And the matter of sexual capacity or performance has

been of concern to medical science for a number of years, at

least since before Freud, is that not true?

A. Yes, sir. May I elaborate on my answer to that?

Jupce Grant: Yes.

Tue Witness: But it is only within the past 10 years

that we are gaining information about the effects of the

diurnal variations in testosterone and other chemicals which

have profound effect on the sexual organs. It is only

within this period of time that we are beginning to have a

chemical understanding——well, not so much a chemical

ees * but an understanding of the physiologic

variations in hormonal function which go on during the day

and at night, in particular individuals. And, by, for ex-

ample, studying agents like this, cn the basis of these chem-

ical determinations, for example, this might be a way of

determining whether they work or not. I mean, we just do

not know. So now science has available techniques possi-

bly to study agents like this. (Tr. M. 49-50).

54a

Appendix E-—Magistrate’s Recommendation.

sults. The doctor’s treatment of over 2,000 patients over

40 years for sexual dysfunctions contributed to his firm

opinion. (Tr. F. 20, 23).

Opinions of experts when founded upon known scien-

tific facts are not to be considered the same as opinions

of laymen, but are considered by the courts as substan-

tive evidence. Research Laboratories, Inc. v. United

States, 167 F. 2d 410, 416 (9th Cir. 1948).

Dr. Hotchkiss’ reliance upon well-known medical and

pharmacological texts certainly falls within the category

of “known scientific facts.” The ALJ was thus within his

discretion in affording this testimony more weight than

that afforded Dr. Davis’ expert evidence.

Dr. Hotchkiss testified that none of the ingredients in

plaintiffs’ products were, as marketed,’ in and of them-

* Dr. Hotchkiss testified that although caffeine was a stimulant,

the dosage in All American Booster Caps was too weak to effect

any sexual stimulus (Tr. F. 44, 78). Plaintiffs contend that Dr.

Hotchkiss failed to recognize that the recommended dosage was

3 pills daily, which they contend, and Dr. Davis indicated, would

have a stimulating effect. While this Court recognizes that there

is some merit to plaintiffs’ argument, in Leach v. Carlile, 258

U.S. 138, the Court held that a difference of opinion as to whether

a product had any value at all did not bar a stop-mail order

based on claims of far greater curative powers than the product

could actually have. See Reilly, supra, at 273. Certainly plain-

tiffs’ ad for the caffeine—:ontaining product bespeaks far greater

sexual stimulus value than it could actually have, based on Dr.

Hotchkiss’ testimony.

55a

Appendix E—Magistrate’s Recommendation.

selves,’ effective sexual stimulants, (passiflora, rufous

capsicum annum Tr. F’, 25-26, 31-32; ginseng Tr. 30; dami-

ana, serenoa serrulata Tr. 34-35; caffeine, ascorbic acid,

Vitamins A and E Tr. 42-45; methyl salicylate Tr. 47-50).

He noted that there was no valuable aphrodisie or

patients without organically caused sexual problem. (Tr.

F. 25); that the ingredients in the products at issue were

not used in the medical profession® (Tr.F. 25-27) ; that the

1907 edition of the U.S. Dispensary, 19th ed., stated that

ginseng pasnas was not employed as a medicine here and

the 1974 edition stated that it was rarely so employed; that

the 1973 U.S. Dispensary and British Pharmacopoeia

deleted all reference to ginseng (Tr.F. 29-30) ; that Ginseng

and Imitation Spanish Fly (red pepper) had no effect on

sexual activity (Tr.F. 32); that the damiana in Jungle

Passion Caps (red pepper, damiana, serenoa serrulata)

——s

"Dr. Hotchkiss testified that application of the methyl

salicylate in Drive Her Wild Cream and Instant Erection Oil

would probably induce some sexual excitement, but as a result of

the tactile sensation rather than its inherent potency. (Tr. F. 79-

90).

As for Vitamins C, A and E, Dr. Hotchkiss indicated that one

suffering from a deficiency of these vitamins might be incidentally

helped in his sex life (Tr. F. 45, 76-77). However, Dr. Hotchkiss

testified that the representations were false in that they purported

to sell aphrodisiacs for the general population, which the doctor

said do not exist. (Tr. F. 118-19). Indeed, Dr. Davis testified

that he has to examine individuals with “sexual incapacity” to

determine whether they suffer from a physiological or organic

condition before determining whether to prescribe any specific

drug as an aphrodisiac. He testified that he had never prescribed

any of the substances in this case to increase sexuality. (Tr. M.

28-29).

* Dr. Hotchkiss’ expertise in the area of sexual problems is

supported by the fact that he presently teaches first and second

year medical students about sexuality, which requires him to re-

main aware of current literature on sex. The doctor said that his

opinions coincided with the concensus of informed medical and |

scientific opinion in urology. (Tr. F. 51-52).

56a

Appendix E—Magistrate’s Recommendation.

was deemed to be of no value except as a feeble tonic (Tr.

F. 34) in the 1907 U.S. Dispensary; that the 1947 US.

Dispensary states that there is no convincing evidence of

its remedial value, it is never currently prescribed by

physicians, and is now deleted from modern pharmacolo-

gies; that serenoa serrulata was deleted from the U.S.

Dispensary after 1947 (Tr. F. 34-35); that passiflora was

considered to be of doubtful value in the 1907 U.S. Dis-

pensary; that the 1907 U.S. Dispensary states that definite

knowledge of the nature of its active principle is lacking

(Tr.F. 90-92); and that the 1975 ed. of the U.S. Pharma-

copoeia doesn’t list passiflora at all.

Although Dr. Davis testified that the products might well

have an aphrodisiac effect because, for example, some irri-

tated the urinary tract (Tr. M. 7, 17), he relied on scant

textual evidence (Tr. M. 15-17, 32). His testimony indi-

cated that he did not know whether many of the represen-

tations were medically true or false (Tr. M. 11) and that

experimentation may have been enlightening. (Tr. M. 17-

18, 22, 49). Had Dr. Davis indicated his reliance on

treatises of a caliber of that relied on by Dr. Hotchkiss,

there may have been more of a question as to whether the

ALJ determination was supported by substantial evidence.

Plaintiffs failed to controvert or undermine the substantial

evidence supporting the ALJ decision that plaintiffs’ rep-

resentations were false.

Ill

Finally, this Court considers plaintiffs’ argument that

the ALJ erred in refusing to reopen the proceeding for the

purpose of taking evidence on the nature of placebos and

the relationship of the placebo effect on “the effectiveness

of medical therapy” and to permit plaintiffs to gather re-

57a

Appendix E—Magistrate’s Recommendation.

sults of research on ginseng discussed in the April 25, 1976

New York Times Magazine.

The standard for reviewing this decisicn was recently

stated by this Circuit.

[A]n agency’s refusal to reopen the record cannot be

deemed arbitrary and capricious unless the new evi-

dence offered, if true, would clearly mandate a change

in result,....

Greene County Planning Board v. FPC, 559 F.2d 1227,

1233, (2d Cir. 1976), en banced on other grounds, 565 F.2d

807 (2d Cir. 1977).

In this case, it is clear that evidence of a ple »bo effect

of these products would not have altered the outcome of

the hearing. Defendants correctly contend that if products

are represented as causing a physical reaction when used,

and this representation is false, the fact that they inci-

dentally have a favorable psychological effect does not

vitiate the falseness of the representations.

Were the courts to protect false advertising because

some, or even many, customers benefited from the belief

that worthless drugs were improving their sexual situation,

39 U.S.C. § 3005 would be rendered ineffective. It has in-

deed been documented that just as one’s state of inind may

create body illness, so may it be a cure for physical ail-

ments.’

The use of placebos, if at all, should be properly con-

fined to the province of skilled medical personnel who have

examined the troubled individual, asertained that his

problem is not physiological, and determined that a placebo

may be of aid. In fact, an article offered by plaintiffs

® See, e.g., “Potent Non—Drugs—Placebos Are Harmless, But

they Work”, Wall St. Journal. Aug. 25, 1977, at 1, col. 1 (annexed

to plaintiffs’ supplemental affidavit, 10/21/77).

58a

Appendix E—Magistrate’s Recommendation.

regarding placebos suggests the ethical problems of physi-

cians in prescribing placebos.

For many doctors, deliberate use of a placebo to treat

a patient involves an ethical problem. The placebo

will work only if the physician lies to the patient. In-

deed, studies have shown that the more conviction he

can muster in his deception the more effective the

placebo. ‘‘Potent Non-Drugs.... ”. supra.

Thus, the failure to reopen the hearing to take evidence

on the placebo issue did not constitute a violation of due

process.

The requirements of due process mandate that an

administrative hearing will constitute ‘‘a fair trial,

conducted in accordance with fundamental principles

of fair play. and applicable procedural standards estab-

lished by law. (citations omitted). Although an ALJ

has wide latitude in the conduct of a hearing, ...,

‘‘administrative convenience or even necessity cannot

override the constitutional requirements of due

process.’’ (citations omitted). Lloyd Carr & Co., et

al v. Commodity Futures Trading Comm’n, 77-4146,

slip op. at 821 (2d Cir. Dee. 30, 1977).

It is therefore respectfully recommended that defend-

ant’s motion for summary judgment he granted.

The foregoing shall constitute my findings on this matter.

Respectfully submitted,

So. ScHREIBER

Sol Schreiber

United States Magistrate

Datep: New York, New York

April 25, 1978

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.