Record and brief — Athena Products, Ltd. v. United States Postal Service

Supreme Court brief1982

Ask Donna

What actually matters in this document.

Text

WOE

81-1254 [spr om

No. OGG 32 198)

Supreme Court of the United [states Lk. Stevag

CLEP |

October Term—1981

ATHENA PRODUCTS, LTD..,

Petitioner,

vs.

UNITED STATES POSTAL SERVICE,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT

Attorneys for Petitioner:

Tom B. Benham,

Counsel of Record

Janie F. Duncan

BENHAM & COHEN, P.C.

Suite 210

6600 Powers Ferry Road, N.W.

Atlanta, Georgia 30339

(404) 955-1118

Copy Center Law Printers, Atlanta, Ga. Phone 261-5273

I. Questions Presented

The United States Postal Service brought this action against

Petitioner corporation, pursuant to 39 U.S.C. §3005 and §3007,

alleging that Petitioner had solicited monies through the mails by

means of false representations in its advertising of fifteen

designated products. Section 3005 prohibits solicitation of

monies through the mails by means of false representations and

authorizes detention of all mail sent to a person who violates this

statute. Section 3007 authorizes a federal district court, upon a

probable cause showing that §3005 is being violated, to issue a

preliminary injunction detaining all of the alleged offender’s

mail pending conclusion of §3005 administrative proceedings.

The questions thereby arising are:

(1) Whether 39 U.S.C. §3907 violates the First Amendment

mandate that restraints of speech must be narrowly drawn

and not in excess of that necessary for the Government to

achieve its objective because:

(a) it authorizes detention and examination of all of adefen-

dant’s mail, pending conclusion of administrative pro-

ceedings;

(b) detention and examination of all mail occurs even if the

challenged representations are removed from the adver-

tising;

of mail and completion of the administrative pro-

ceedings;

(d) detention and examination of mail may be imposed upon

a showing @7 probable cause and without any showing of

intent to deceive;

(e) said restraints pose a serious threat of ruining a defen-

dent’s business prior to any adjudication on the merits;

(f) Congress had available to it the less restricive alternative

of simply prohibiting a defendant from making the

representations alleged to be false.

(2) Whether said First Amendment mandate was likewise

violated by the preliminary injunction issued against the

Petitioner for a period of one hundred twenty days, subject -

to extension, which fully implemented the §3007 restraints

described above.

(3) Whether said First Amendment mandate is violated by 39

U.S.C. §3005, which imposes identical restraints to §3007,

except that (a) restraints are imposed after an administrative

hearing on the merits; and (b) the restraints are permanently

imposed.

(4) Whether §3007 fails to provide adequate procedural

safeguards as the restraints, described above, can be imposed

for an indefinite period upon only a showing of probable

cause.

(5) Whether injunctions imposed pursuant to 39 U.S.C. §3005

and §3007 violate the principle that restraints of speech must

significantly advance the Government’s objective in that said

injunctions fail to prohibit the continuation of advertising

alleged to be false, though the purpose of the injunctions is to

protect the public from false representations.

(6) Whether the Court of Appeals erred in holding that the First

Amendment does not bar the Government from imposing

excessive prior or subsequent restraints on commercial

speech until such time as a defendant proves that its speech is

truthful.

TABLE OF CONTENTS

RR 6 kd ccccccaccencsecisceseses

co as acne susuckcasenbeucunesee bet

Ns cc cdwavenessewsudedeseueess

DE ccacucudasadasancanpscebacnseeseee

Constitutional Provisions and Statues Involved ....

ee oe ee esteebanebaenwenee

Reasons Why Certiorari Should Be Granted .......

A. 39 U.S.C. §3005, §3007 and the preliminary

injunction impose Draconian restraints

which violate First and Fifth

ED hn a6 on ccckdvccucsccscecss

1. Impact and constitutionality of §3007

and the preliminary injunction ............

(a) Restraints of speech must be

EDs ccccesetebeudeeescas

(b) Restraints of speech must advance

the Government’s purpose ............

2. Theconstitutionality of §3005.............

B. The Court of Appeals ruling contravenes

four principles established by this Court and is

in conflict with the decisions of other

federal courts of Appeals ...........eseeeee0s

C. The Court of Appeals misinterpreted

i ns cpu kee ueebeone

D. Petitioner’s constitutional challenge

raises specific issues in the realm of

commercial speech which this Court has

ED 6.6.0 cadet ecdvcovehasteestbecces

Vill.

XI.

i U.S cake les teeseue been edocs ees 23

DT DeGdecuveccscetbecuverveseeusb ewes Al

Opinion of the Fifth Circuit Court of Appeals

REE ge Ce gr ne eee eee Peer Bl

Opinion of the Federai District Court of the Nor-

thern District of Georgia

i Tre cou see ie de dade sues ouee ee es Cl

Notice of Denial of Petition for Rehearing

ES cebu ven iad cas een web buerweneeene ss D1

39 U.S.C. §3005

Ii. Authorities

Page

Bates v. State Bar of Arizona,

err 8, 17, 19, 20, 22

Beneficial Corp. v. FTC, 542 F. 2d 611 (3rd Cir. 1976)..... 8,19

Blount v. Rizzi, 400 U.S. 410 (1971)... .............. 9, 14, 16

Carroll v. Pres. and Comm’r of Princess Anne, 393

UB. 576 GOED. «co ccvcocvececcsccesscesonntuannneul 8, 19

Central Hudson Gas and Electric Corp. v. Public Serv-

ice Comm’n, 447 U.S. 557 (1980). . . .6, 8, 14, 15, 19, 20, 21, 22

Consolidated Edison v. Public Service Comm’n, 447

ES fo Pre 8, 19

Deberry v. City of LaGrange, 62 Ga. App. 74, 8 S.E.

rn YL ee ee 13

Donaldson v. Read, 333 U.S. 178 (1948).............. 8, 16, 20

E.F. Drew v. FTC, 235 F. 2d 735 (2d Cir. 1956)........... 8, 20

Encyclopedia Brittanica v. FTC, 605 F. 2d 964 (7th

< So Pre 8, 19

Ex Parte Jackson, 96 U.S. 727 (1877). ........-.eceeecees 13

First Nat’! Bank of Boston v. Bellotti, 435 U.S. 765

CEBU. c cc cccccccsccscoscesscsconsenenenuueneee 8, 12, 19

Freedman v. Maryland, 380 U.S. 51 (1965)............. 14, 15

Friedman v. Rogers, 440 U.S. 1 (1979}.............. 20, 21, 22

FTC v. Mary Carter Paint Co., 382 U.S. 46(1965)....... 10, 18

FTC v. Standard Education Society,

SER UB. BEB GG oc vc cccccsccscesceeccensenenane 18

Fuentes v. Shevin, 407 U.S. 67 (1972)... ........... eee eeee 14

Fusari v. Steinberg, 419 U.S. 379 (1975)... 2.2... . cece eens 13

Gelb v. FTC, 144 F. 2d 580 (2d Cir. 1944)............ 10, 17, 18

Grove Press, Inc. v. City of Philadelphia, 418 F. 2d 82

of. S eepeyerrrey Peper ee 17

Hiett v. United States, 415 F. 2d 664 (Sth Cir. 1969)......... 16

Lamont v. Postmaster Gen’l, 381 U.S. 301 (1965)........... 19

Liggett Co. v. Baldridge, 278 U.S. 105 (1958). .............. 13

Lynch v. Blount, 330 F. Supp. 689(S.D. N.Y. 1971)...... 10, 15

Matthews v. Eldridge, 424 U.S. 319(1975).............0065 13

Memphis Light, Gas and Water Div. v. Croft, 436

= rr ene 13

Mitchell v. W.T. Grant Co., 416 U.S. 600 (1974). ........ 13,14

Moore v. City of Cleveland 431 U.S. 494(1977)............. 12

Nat’! Comm’n on Egg Nutrition v. FTC, 570 F.2d 157

cide se ce enacuneeesaweenseersees 8, 10, 19

Ohralik v. Ohio State Bar Ass’n, 436 U.S. 447 (1978)..... 20, 21

Pierce v. Society of Sisters, 268 U.S. §10(1925)............. 13

Pittsburgh Press Co. v. Human Relations Comm’n,

cdnccckouéencoeceeseeseeed 8, 17, 19, 20

Public Clearing House v. Coyne, 194 U.S. 497 (1904)........ 16

Reilly v. Pinkus, 338 U.S. 269 (1949)... 00... ce eee eee 10

Ro eden v. Kentucky, 413 U.S. 496 (1973)... 2.2.00... cee ee 17

Schad v. Borough of Mt. Ephrain, _.. . * U.S. _

i een eeerecedbaneseseednune 12

Shelton v. Tucker, 364 U.S. 479 (1960)... .. 2.2.6... 6005. 8,19

Speiser v. Randall, 357 U.S. 513 (1959)... . 0... cece 17

Standard Oil Corp. of Cal. v. FTC, 577 F. 2d 653 (9th

die et eee ekeehdeseetioceeee se 10, 17, 18

Thomas v. Collins, 323 U.S. 516(1945)... 2... 6 eee eee 19

TWA, Inc. v. FTC, 594 F. 2d 212 (9th Cir. 1979). ........... 21

United States v. Book Bin, 306 F. Supp. 1023 (N.D.

SR aS RE er eee 9, 10

United States v. Outpost Dev. Corp., 369 F. Supp. 399

a inn en aun eeekgneoebescoesoecs 15

United States v. Van Leeuwen, 397 U.S. 249(1970).......... 13

Virginia Pharmacy Bd. v. Virginia Citizens Consumer

Council, 425 U.S. 748 (1976)... . 2.6.0.6 6c ee eee 15, 16, 20, 21

Warner Lambert Co. v. FTC, 562 F. 2d 749

ene ccekeee gene eeereseoeesoeeus 8,19

Constitutional Provisions:

Constitution of the United States,

PING. oc cc cccccccccces 2, 6, 8, 9, 13, 17, 19, 21, 22

Constitution of the United States,

ee bed cc ecu geensoeeese cee s 2, 9, 13

Constitution of the United States,

EES Ee ee 2

Page

Statutes:

BP CBG BER, Dic c ccccccccsccccccccccccscosccccess 11

SE MA. « cedechecesoneensecseeseeeubeuses 11

ee ee Se SPE c ccccccccccsccccoccsWescccscceces 6

Fics CS 0c cecccccczcncces 3, 4, 6, 7, 10, 11, 15, 16, 18

39 U.S.C. §3007........ 3, 4, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16

vii

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1981

NO.

ATHENA PRODUCTS, LTD., Petitioner

UNITED STATES POSTAL SERVICE

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Petitioner, Athena Products, Ltd., prays that a writ of

certiorari issue to review the opinion and judgment of the Fifth

Circuit Court of Appeals rendered in these proceedings on

August 27, 1981.

Ill. Opinions '~volved

The opinion of the Court of Appeals, which is reported at 654

F.2d 362, appears in Appendix A, infra, p. A-1. The opinion of

the District Court is unreported and appears at Appendix B, in-

tra, p. B-1. The Court of Appeals affirmed the judgment of the

District Court. A petition for rehearing to the Couit of Appeals

was denied without opinion. A copy of the notice of denial ap-

pears in Appendix C, infra, p. C-1.

IV. Jurisdiction

The judgment of the Court of Appeals was rendered on

August 27, 1981. On September 9, 1981, the time for filing the

petition for rehearing was extended through September 14,

1981. On this latter date a petition for rehearing was filed. On

October 8, 1981, said petition was denied. This petition for cer-

tiorari was filed less than ninety days from the latter date. The

jurisdiction of this Court is invoked under 28 U.S.C. §1254(1).

V. Constitutional Provisions and Statutes Involved

A. The Constitution of the United States, Amendment One,

‘**Congress shall make no law. .abridging the freedom of

speech...”

B. The Constitution of the United States, Amendment Four,

**The right of the people to be secure in their persons,

houses, papers and effects against unreasonable sear-

ches and seizures, shall not be violated, and no warrants

shall issue, but upon probable cause, supported by oath

or affirmation, and particularly describing the place to

be searched and the persons or things to be seized.”

C. The Constitution of the United States, Amendment Five,

**No person shall. ..be deprived of life, liberty or pro-

perty, without due process of law...”’

D. 39 U.S.C. §3005,

See Appendix D.

E. 39 U.S.C. §3007,

(a) In preparation for or during the pendency of pro-

ceedings under sections 3005 and 3006 of this title, the

United States district court in the district in which the

defendant receives his mail shall, upon application

therefor by the Postal Service and upon a showing of

probable cause to believe either section is being violated,

enter a temporary restraining order and preliminary in-

junction pursuant to rule 65 of the Federal Rules of Civil

Procedure directing the detention of the defendant’s in-

coming mail by the postmaster pending the conclusion

of the statutory proceedings and any appeal therefrom.

The district court may provide in the order that the de-

tained mail be open to examination by the defendant

and such mail be delivered as is clearly not connected

with the alleged unlawful activity. An action taken by a

court hereunder does not affect or determine any fact at

issue in the statutory proceedings.

(b) This section does not aply to mail addressed to

publishers of newspapers and other periodical publica-

tions entitled to a periodical publication rate or to mail

address to the agents of those publishers.”

VI. Statement of Facts

Petitioner, Athena Products, Ltd. (hereinafter ‘‘Athena’’)

sells nutritional supplements and other related products through

the mail. It also publishes Soma, a bi-monthly magazine which

provides information on health and nutrition. The magazine has

approximately 50,000 paid subscribers. Athena sells its products

almost exclusively through advertisements in Soma magazine.

Athena has been in business since 1977, and at the time of this ac-

tion employed forty people.

The evidence is undisputed that the United States Postal Serv-

ice (hereinafter ‘‘USPS’’) has examined each issue of Soma since

1977. The contents of the advertisements in Soma which are in-

volved in this suit have been observed by the USPS for years

without comment or criticism. It is also undisputed that Athena

had previously requested the USPS to notify it of any disatisfac-

tion with any advertising so that the harsh consequences of §3005

and §3007 would not occur. The USPS will not provide any

advisory opinions prior to publication as to whether or rot an

advertisement violates 39 U.S.C. §3005.

On February 27, 1981, the USPS filed fifteen administrative

complaints against Athena pursuant to 39 U.S.C. §3005. At the

same time it filed a complaint in District Court pursuant to 39

U.S.C. §3007, seeking a temporary restraining order and

preliminary injunction (pending the completion of the §3005

administrative proceeding) to detain Athena’s mail. Section 3005

prohibits the solicitation of monies or remittances through the

mail by means of false representations and authorizes detention

of all mail sent to a person who violates the statute, subject to the

latter’s right to survey the mail before the postmaster returns the

mail to the sender. Section 3007 authorizes a federal district

court, upon a showing of probable cause that §3005 is being

violated, to issue a temporary restraining order and preliminary

injunction detaining all mail of the alleged offender pending con-

clusion of the §3005 administrative proceeding. The Court may

allow the alleged offender to remove mail unrelated to the

allegedly unlawful activity.

Athena was given one and one-half hours notice of a tem-

porary restraining order hearing on Friday, February 27, 1981, at

3:00 P.M. The case was then set down for a preliminary injunc-

tion hearing on March 12, 198i, thirteen days after the date of

the filing of the complaint, which thirteen-day period included

only eight weekdays. Athena moved for a continuance in order

to have additional time to prepare in light of the fact that the

evidence showed the USPS had been preparing its case for at

least ten months without notice to Athena of the pendency of the

proceeding and in light of the fact that the suit involved fifteen

products and hundreds of pages of pleadings. The continuance

was not granted.

At the request of the USPS, the Court ordered that Athena

submit affidavits of any expert witness which it might use in the

case within nine days of February 27, 1981, and five affidavits of

this nature were filed within the specified time period. The af-

lidavits were from three medical doctors, one doctor of

osteopathy, one Ph.D. in biochemistry, and one writer in the

field of health and nutrition. The affidavits attested to the truth

of Athena’s advertising claims.

In addition to the expert testimony substantiating its claims,

Athena presented hundreds of letters received from customers

attesting to satisfaction with the fifteen products that were the

subject matter of the complaint. The evidence further showed

that products sold by Athena are commonly found in drug and

health food stores and are available over-the-counter without

prescription. The Court concluded that there was no real ques-

tion by the USPS as to the safety of Athena’s products. Athena

provides all customers with an unconditional money-back re-

fund at any time that it is requested.

The USPS’s evidence was based solely upon the testimony of

three alleged expert witnesses. There was no evidence presented

by the USPS of any customer dissatisfaction with either

Athena’s products or service.

On April 2, 1981, the District Court issued a preliminary in-

junction directing the USPS to detain all of Athena’s mail at

certain specified addresses, including its street address, pending

conclusion of the administrative proceeding but not in excess of

one hundred twenty days, subject to Athena’s right to examine

and remove mail not related to the fifteen products which com-

prised the subject matter of the complaint. The order further

directed that all future advertising for the fifteen products must

solicit orders to the addresses where the mail was being detained

by the USPS, so that all future orders from any advertising for

the fifteen products would be detained. The injunction, in ef-

fect, restrained Athena from all advertising of the fifteen pro-

ducts even if it removed ‘he challenged representations from its

advertising. The District Court order also prevented Athena

from receiving orders for any other products sold by Athena if

such an order contained a request for one of the fifteen pro-

ducts. The preliminary injunction had the following effects

upon Athena:

(1) Athena was put out of business for one hundred twenty

days as the products involved in this lawsuit constitute

ninety percent of the company’s sales.

(2) Athena was prohibited from advertising in an un-

disputedly truthful manner for one hundred twenty days

as all advertising had to solicit remittances for the fif-

teen products to addresses where the mail would be de-

tained and unanswered.

(3) Athena had no opportunity to communicate with those

customers whose mail was detained.

(4) Athena was prevented from receiving any reorders for

products, even though they resulted from (a) a satisfied

customer who wished to continue receiving the product,

or (b) a customer who placed an order as a result of a

non-offending advertisement.

(5) Athena was prevented from receiving orders for pro-

ducts not related to the lawsuit if the commonly used

order blank contained an order for one of the fifteen

products.

(6) All mail addressed to Athena was subject to examina-

tion by USPS employees.

(7) An affirmative obligation was placed upon Athena to

convince USPS employees that Athena was entitled to

mail not related to the fifteen products.

Petitioner appealed the ruling and on April 10, 1981, an ex-

pedited appeal was granted. The Court of Appeals had jurisdic-

tion pursuant to 28 U.S.C. §1292(1).

Petitioner’s chief argument on appeal was that §3005, §3007,

and the preliminary injunction violated the First Amendment

mandate that restraints of speech must be narrowly drawn and

not in excess of that necessary to achieve the Government’s ob-

jective. The Court of Appeals summarily disposed of this issue

by stating,

**In Central Hudson Gas, the court stated that whether a

governmental regulation is more extensive than necessary

only becomes relevant once it has been determined that

speech is not misleading.’’ See p. 368.

Second, Athena argued that the statutes and the injunction

violated the First Amendment mandate that restraints of speech

must significantly advance the Government’s purpose. The

Court of Appeals did not address this issue.

Third, Athena challenged the constitutionality of the District

Court order which, in effect, prohibited Athena from advertis-

ing in a manner that was undisputedly truthful. The Court of

Appeals recognized the effect of the District Court order by

stating,

**While no direct prohibition on speech is involved, Athena

is obvicusly deterred from advertising products for which it

cannot fill orders.’’ See p.g 365.

The Court of Appeals did not address this issue further.

Fourth, Athena argued that §3007 did not provide adequate

procedural safeguards. The Court of Appeals rejected this con-

tention on two grounds. First, the Court found that the one

hundred twenty day limitation assured Athena of a ‘‘speedy’”’

resolution on the merits. In fact, however, the injunction was

continued by the District Court when a decision had not been

received in one hundred twenty days. Second, the Court found

that,

‘*Despite the fact that the court assessed the evidence

against a standard of probable cause, the hearing afforded

in this case minimized the risk of an erroneous depriva-

tion***.”’ p. 368.

It should be further noted that in Footnote 7 of the Court of

Appeals’ decision, the Court stated,

‘*Precisely what constitutes a showing of probable cause

under §3007 is unclear.”’ p.368.

A motion for rehearing was filed by Athena, as well as a mo-

tion for rehearing en banc. Both motions were denied.

VII. Reasons Why Certiorari Should Be Granted

A. 39 U.S.C. §3005, §3007, and the Preliminary Injunction Im-

pose Draconian Restraints Which Violate First and Fifth

Amendment Rights.

Certiorari should be granted to consider the constitu-

tionality of the 39 U.S.C. §3005, §3007, and the preliminary

injunction issued in the case at bar, as these statutes and the

injunction impose Draconian restraints which infringe upon

First and Fourth Amendment rights, as well as unnecessarily

threaten the ruin of a business. This occurs regardless of the

alleged offender’s good faith or lack of intent to deceive, and

despite the vagueness of the legal concept of ‘‘deception.”’

Under §3007, these sanctions are imposed merely upon a

showing of probable cause, which, according to the decision

of the Court of Appeals, is an unclear standard.

1. IMPACT OF AND CONSTITUTIONALITY OF §3007

AND THE PRELIMINARY INJUNCTION.

a. Restraints of speech must be narrowly drawn.

This Court has repeatedly held that restraints of

speech must be narrowly drawn, not in excess of that

necessary for the Government to achieve its objec-

tive, and cannot be sustained if the Government ob-

jective can be achieved by less restrictive means.

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

Pres. and Comm’r of Princess Ann, 393 U.S. 175

(1968). This fundamental principle has been applied

to commercial speech, Central Hudson Gas and Elec-

tric Corp.,, 447 U.S. 557, 565 (1980); Consolidated

Edison v. Public Service Comm’n, 447 U.S. 530,

541(1980); First Nat’! Bank of Boston v. Bellotti, 435

U.S. 765, 776 (1978); Bates v. State Bar of Arizona,

433 U.S. 359, 375 (1977); though the speech was

without First Amendment protection by reason that

it promoted an illegal activity, Pittsburgh Press Co.

v. Pittsburgh Human Relations Comin., 413 U.S.

376, 390 (1973), or constituted false and misleading

advertising, Warner-Lamben Co. v. FTC, 562 F.2d

749 (D.C. Cir. 1977); Beneficial Corp. v. FTC, 442

F.2d 611 (3d Cir. 1976); Nat’) Comm’n on Ege Nutri-

tion v. FTC, 570 F.2d 157 (7th Cir. 1977); En-

cyclopedia Brittanica v. FTC, 605 F.2d 964 (7th Cir.

1979). See also Donaldson v. Read, 333 U.S. 178, 183

(1948); E.F. Drew v. FTC, 235 F.2d 735, 747 (2d Cir.

1956). '

In Bates, supra, this Court held that the state in-

volved could have achieved its objective of protecting

the public from any potential deception, which might

result from advertising by attorneys, by means less

drastic than barring all advertising. In Pittsburgh

Press, supra, this Court sustained an order of a

municipal agency prohibiting a newspaper from

publishing job advertisements in sex-designated col-

umns. Though Pittsburgh was decided before this

Court expressly extended First Amendment protec-

tion to commercial speech, and the speech restrained

promoted an illegal activity, i.e., sex discrimination

in employment; nevertheless, in sustaining the order

this Court noted, ‘‘The order is clear and sweeps no

more broadly than necessary.’’ 413 U.S. at 390.

Petitioner submits that §3007 and the preliminary

injunction, which fully implements the statute, sweep

‘‘more broadly than necessary’’ and thereby un-

necessarily invade First and Fourth Amendment

rights and threaten the ruin of a business.

First , §3007 authorizes detention of all of a defen-

dent’s mail. Thus, communications clearly protected

by the First Amendment, e.g., letters from a defen-

dant’s attorney, as well as those connected with the

allegedly false speech, are examined and detained.

Though a defendant ‘‘may’’ be authorized to inspect

and remove mail unrelated to the allegedly illegal ac-

tivity, this imposes an onerous burden since a §3007

order may last over a year, and the needs of a

business may require checking the mail on a daily

basis or more often. The burden becomes even more

onerous if a dispute arises as to whether a com-

munication is connected to the allegedly false speech,

and a defendant must then ‘‘demonstrate its noncon-

nection’’ to the satisfaction of the local postmaster.

United States v. Book Bin, 306 F.Supp. 1023 (N.D.

Ga. 1969), aff’d Blount v. Rizzi, 400 U.S. 410(1971).

Further, a defendant is not necessarily allowed the

right to examine its mail, as the statute does not re-

quire the District Court to allow such examination.

Second, §3007 permits or, 25 in the case at bar, has

been interpreted to permit, he holding of all mail

related to the product, which is the subject of alleged-

ly false advertising, pending completion of ad-

ministrative proceedings. Thus, even if a defendant

eliminates allegedly false representations from its

advertising, mail related to that product will never-

theless be detained. A defendant is not going to adver-

tise a product if it cannot receive orders for it. Hence,

a §3007 ader suppresses totally truthful advertising,

as well as allegedly false advertising.

Third, a §3007 order remains in force pending con-

clusion of §3005 proceedings. However, no time

limits are provided within which such proceedings

must be completed. See, e.g., United States v. Book

Bin, supra. \n fact, the evidence in the within case

showed that administrative proceedings have lasted

more than eighteen months. Thus, a §3007 order may

be imposed for an inordinate length of time.

Fourth, the line between truthful and false speech

is not always clear. Whether or not advertising is

deceptive is an issue upon which courts, regulatory

agencies and businesses frequently disagree. See,

e.g., FTC v. Mary Carter Paint Co., 382 U.S. 46

(1965); Gelb v. FTC, 144 F.2d 580 (2d Cir. 1944);

Nat’l Comm’n on Egg Nutrition v. FTC, 570 F.2d

157 (7th Cir. 1977); Standard Oil Corp. of Cel. v.

FTC, 577 F.2d 653 (9th Cir. 1978). Originally §3005

and §3007 applied only to actual fraud, Reilly v.

Pinkus, 338 U.S. 269 (1949), which helps explain the

harshness of the scheme. Now the Government does

not have to prove an intent to deceive to obtain a

§3007 order. Lynch v. Blount, 330 F.Supp. 689 (S.D.

N.Y. 1971), aff’d 404 U.S. 1007 (1972). Thus, an

order may issue though the representation challenged

was made in good faith. Moreover, since a §3007

order detains and interferes with all of a defendent’s

mail, §3007 poses a substantial and recognized threat

of ruining a defendant’s business, Reilly v. Pinkus,

supra, particularly if that business is small and

dependent on mail orders. Thus, an order may issue

under §3007 which results in the ru'n of a business

although the representations were the result of

mistake, ignorance, or simply because a business

took a position as to the falsity of a representation

contrary to that of the employees of a government

agency.

Fifth, a businessman may not risk publishing an

advertisement which he believes to be truthful for

fear that the Government has taken or will take a

contrary position, particularly if it involves a con-

troversial issue. Thus, a business is not only deprived

of advertising, which may be profitable to it and the

public, but the Government may decide, even by in-

nuendo, what a businessman may Or may not say

even if the Government’s position is wrong.

Sixth, if a defendant is put out of business, he will

have little interest in advertising as to a particular

subject even if he still retains the financial ability to

do so.

Seventh, since a §3007 order issues upon a mere

probable cause showing, a business may be ruined

even if the defendant subsequently succeeds on the

merits.

Eighth, mail sent by consumers is detained for a

year or more, along with the money paid for the pro-

duct, without any explanation to the consumer. The

defendant has no way of notifying such consumer,

who may feel that his funds have been misap-

propriated.

Ninth, the action of the USPS creates a violation

of 16 C.F.R. §4351, which requires notice of any

shipping date delay after thirty days.

The excessiveness of §3007 is emphasized by the

fact that Congress had available to it the less restric-

tive alternative of simply prohibiting a defendant

from making the representations alleged to be false.

For example, like §3005, the Federal Trade Commis-

sion Act, 15 U.S.C. §41, ef seq., is designed to pro-

tect the public from false and misleading representa-

tions. Under the Act the court may issue a

preliminary injunction pending conclusion of ad-

ministrative proceedings, 15 U.S.C. §53(a), (b).

However, the court is limited to enjoining only the

particular advertisement or representation alleged to

be false.

(b) Restraints on speech must advance the

Government’s purpose.

Petitioner further submits that §3007 and the

preliminary injunction are also unconstitutional for

(c)

failure to substantially further the Government’s ob-

jective. This Court holds that,

**fWjhen the government intrudes on one of the

liberties protected by the Due Process Clause of

the Fourteenth Amendment ‘this Court must ex-

amine carefully the importance of the govern-

mental interest advanced and the extent to which

they are served by the challenged regulation.’ ”’

Schad v. Mt. Ephraim, EUS.

101 S.Ct. 2176, 2184 (1981); Moore v. City of

East Cleveland, 431 U.S. 494 (1977).

In Bellotti, supra, this Court struck down a

statute restraining commercial speech on the

grounds that the statute was both underinclusive and

overinclusive. Petitioner submits that the statute and

the preliminary injunction are similarly defective.

On the one hand they unnecessarily suppress

wholly truthful speech, permit interference with all

of a defendant’s mail, permit preliminary and final

detention of mail unrelated to the allegedly unlawful

activity, and threaten the ruin of a business. On the

other hand they do not prevent a defendant from

continuing to make representations alleged to be or

found to be false. Thus, if a defendant retains the

ability to change his operation or has little invest-

ment in it to begin with, i.e., a fly-by-night opera-

tion, such defendant could continue making the

representations and distribute them through the

mails. In fact, the public would be better served by

the less drastic alternative of preventing a defendant

from making the representations alleged to be false.

Lack of procedural safeguards.

Petitioner submits that §3007 is unconstitutional

for failure to contain adequate procedural

safeguards. In determining whether procedural

safeguards attendant to a preliminary deprivation

suffice under the Due Process Clause, this Court has

considered the private interests affected, the risk of

erroneous deprivation, the probable value of the

substituted safeguards, and the Government’s in-

terests, including increased administrative burdens if

a substituted procedure was utilized. Matthews v.

Eldridge, 424 U.S. 319 (1975). In addition, this

Court has considered relevant the length of time of

the deprivation, Matthews, supra; Fusari v.

Steinberg, 419 U.S. 379 (1975); the presence or

absence of subsequent legal remedies, Memphis

Light, Gas and Water Div. v. Croft, 436 U.S. 1

(1978); whether the ‘‘temporary”’ deprivation is, in

fact, ‘‘uniquely final,’’ Memphis Light, supra;

whether a party can receive recompense in the case

of wrongful deprivation, Matthews, supra, and

whether the issues involve complex questions of

evidence or evidence which can be simply

documented, Matthews, supra; Mitchell v. W.T.

Grant Co., 416 U.S. 600 (1974).

In the case at bar, not only are First Amendment

interests affected, but Fourth Amendment interests

as well. This Court has held since Ex Parte Jackson,

96 U.S. 727 (1877), that examination of the mail by

the Government is subject to the warrant require-

ment of the Fourth Amendment, United States v.

Van Leeuwen, 397 U.S. 249 (1970). Enforcement of

§3007 orders inherently involves examination of the

contents of mail of the alleged offender in order to

separate mail subject to detention from that which

may be received. Also affected is the right to carry

on a business and solicit customers. This property

interest has long been recognized as protected by the

Due Process Clause, Pierce v. Society of Sisters, 268

U.S. 510 (1925); Liggett Co. v. Baldridge, 278 U.S.

105 (1928); Deberry v. City of LaGrange, 62

Ga.App. 74, 8 S.E.2d 146 (1940).

The restraint imposed under §3007 may last a year

or more. The Postal Service is not required to post

bond, and it is unlikely a defendant could maintain

suit in case of wrongful deprivation. Thus, not only

is a defendant’s loss uniquely final as to First’ and

Fourth Amendment rights, but also as to the loss of

profits and customers as well. Finally, the issues in-

volved in §3007 proceedings rarely involve evidence

which can be simply documented.

At the one end of the Due Process Clause are the

minimal due process requirements applied in cases

of temporary deprivation of property

rights—notice, hearing and showing of probable

cause, Mitchell, supra, at 609. This is the standard

which Congress has adopted in §3007 proceedings.

At the other end of the spectrum is the traditional

doctrine of prior restraint as set forth in Freedman

v. Maryland, 380 U.S. 51 (1965). This Court has

stated on several occasions, without deciding, thai

the traditional doctrine of prior restraints may be in-

applicable to commercial speech, Central Hudson

Gas, supra, p.571, n.13. Petitioner submits that

whatever this Court decides on this issue, the

safeguards provided by §3007 are insufficient in

view of the factors stated above.

The Court of Appeals, nevertheless, sustained

§3007 on the basis that the order in the case at bar

assured a speedy resolution on the merits of the case.

Petitioner disagrees with this conclusion. Secondly,

the Court of Appeals found, ‘‘despite the fact the

court assessed the evidence against a standard of

probable cause, the hearing afforded in this case

minimized the risk of an erroneous deprivation***.”’

The Court of Appeals, however, ignored what this

Court said in Fuentes v. Shevin, 407 U.S. 67, 87

(1972),

** *To one who protests against a taking of his

property without due process of law, it is no

answer to say that in his particular case due pro-

cess of law would have lead to the same result

because he had no adequate defense upon the

merits.’ ”’

The Petitioner further notes that in Blount v.

Rizzi, supra, this Court held 39 U.S.C. §3007, as ap-

plied in conjunction with §3006 proceedings

(formerly §4007 and §4006), unconstitutional for

failure to contain those procedural safeguards, ap-

plicable to prior restraints of obscenity, as set forth

in Freedman v. Maryland, supra. Section 3006 is

identical to §3005 except the former applies to

obscenity and the latter to false representations.

Since Blount, lower court decisions have sustained

§3005 and §3007, in conjunction with §3005 pro-

ceedings, on the basis that the Freedman safeguards

are inapplicable to false advertising. Lynch v.

Blount, supra; United States v. Outpost Dev. Corp.,

369 F.Supp. 399 (C.D. Cal. 1973). It is noted that

the Fifth Circuit, in the case at bar, purports to join

this line of cases despite the fact that Petitioner did

not argue that the Freedman safeguards applied to

commercial advertising.

Furthermore, the issue decided in Lynch has been

resurrected by subsequent decisions of this Court.

Thus, as previously noted, in Virginia Pharmacy Bd.

v. Virginia Citizens Consumer Council, 425 U.S.

748 (1976), and Central Hudson Gas and Electric

Corp. v. Public Service Comm’n, supra, this Court

held that the traditional doctrine of prior restraints

may be inapplicable to commercial speech.

2. THE CONSTITUTIONALITY OF §3005.

For the same reasons set forth as to §3007, Petitioner

submits that §3005 is likewise unconstitutional for

reasons of excessiveness and failure to significantly ad-

vance the Government’s interests. There are only two

differences between a §3005 and §3007 order. First, the

former issues upon a probable cause showing; whereas,

the iatter issues after administrative hearings on the

merits. Second, a §3007 order lasts until completion of

§3005 proceedings. A §3005 order is permanent. Hence,

a defendant is forever restrained from receiving orders

for a product which has been the subject of false advertis-

ing, and is permanently subject to interference with its

mail for as long as it uses the addresses designated in a

§3005 order.

In addition it should be noted that a §3005 order issues

without notice of any statutory right of appeal. The

result is that all mail which may have been previously

held under §3007 is returned to sender before the affected

company is afforded the opportunity to take any action

for injunctive relief in the District Court.

Petitioner further notes that in Donaldson v. Read,

333 U.S. 178 (1948), this Court sustained the constitu-

tionality of 39 U.S.C. §3005; however, it does not appear

that the issues now raised by Petitioner were addressed in

that case. Furthermore, the basis for that decision was

the privilege doctrine, i.e., ‘‘the use of the mail is a

privilege which ‘Congress * * * may annex such condi-

tions * * * as it chooses.’ Public Clearing House v.

Coyne, 194 U.S. 497 (1904).”” Hiett v. United States, 415

F.2d 664, 666 (Sth Cir. 1969). As the Court in Hieti

recognized, this Court has since ‘‘given the privilege doc-

trine the burial it merits.’’ /d. at 668. Thus, inBlount vy.

Rizzi, supra, this Court said, .

** *The United States may give up the post office

when it sees fit, but while it carries it on, the use of

the mails is almost as much a part of free speech as

the right to use our tongues * * *.” ”’

In addition, Donaldson was decided before this

Court’s decision, in Virginia, supra, extending First

Amendment protection to commercial speech, and the

order sustained in Donaldson was directed to a scheme or

device, i.e., a puzzle contest, rather than a commercial

message. Despite these factors, the $3005 order in

Donaldson narrowly escaped unconstitutionality only

because it was voluntarily revised and narrowed by the

Postal Service to detain only that mail specifically related

to the contest found to be fraudulent. Not only is such

narrowness not present in the case at bar, but the Court

of Appeals has deemed it unnecessary.

B. the Court of Appeals Ruling Contravenes Four Constitu-

tional Principles Established by this Court and is in Conflict

With the Decisions of Other Federal Circuit Courts of Ap-

peals.

Second, certiorari should be granted for reason<hat the

Court of Appeals’ decision contravenes four principles

established by this Court and directly conflicts with the deci-

sions of other federal appellate courts.

The Court of Appeals has held, in effect, that until such

time as commercial speech is proven to be truthful, the First

Amendment does not bar the Government from imposing

excessive restraints, including prior restraints, on commer-

cial speech though the restraints unnecessarily restrain clear-

ly protected, as well as arguably protected or unprotected

speech, and threaten to ruin a business.

The effect of this rule is threefold. First, it deems commer-

cial speech to be unprotected until proven otherwise. This

contravenes the well established principle that speech is

presumably protected until proven to be unprotected. See

Roaden v. Kentucky, 413 U.S. 496, 504 (1973); Pittsburgh

Press, supra; Grove Press, Inc. v. City of Philadelphia, 418

F.2d 82, 88 (3rd Cir. 1969). Second, it puts the burden of

proof upon the alleged offender to prove that its speech is

truthful and therefore protected in order to escape the ex-

cessive restraints. This violates the principle that the Due

Process Clause requires the Government to assume the

burden of proving that speech is without First Amendment

protection. Speiser v. Randall, 357 U.S. 513 (1958).

Furthermore, a defendant may be unable or unwilling to

sustain the burden of proving its speech truthful for two

reasons. First, as pointed out in Speiser, supra, at 525, ‘‘In

all kinds of litigation it is plain that where the burden of

proof lies may be decisive of the outcome.’’ Second, what

the law deems deceptive is no longer that which is false in

fact. Indeed, the label of deception has been applied for the

purpose of curing a variety of ills or imagined ills, e.g. , Bates,

supra.

In addition, a representation may be found to be false

though it is neither false in fact nor misleading to the average

consumer. Instead, deception includes that which is deemed

to have the potential to deceive the ignorant, credulous, or

unthinking. Standard Oil Co., supra.

In Gelb v. FTC, 144 F.2d 580 (2d Cir. 1944), for example,

the Commission found that respondent’s representation that

its products colored hair permanently was false and mislead-

ing for the reason that while it imparted ‘*‘permanent colora-

tion to the hair to which it is applied, . . .it has ‘no effect upon

new hair’ growth.’’ In sustaining the Commission the Court

said,

**It seems scarcely possible that any user of the prepara-

tion could be so credulous as to suppose that hair not yet

grown out would be colored by an application of the

preparation to the head. But the commission has con-

strued the advertisement as so representing it, and so

construed it is false. * * * Since the Act is for the protec-

tion of the trusting as well as the suspicious, as stated in

Federal Trade Commission v. Standard Education Socie-

ty, 302 U.S. 112, 116, 58 S.Ct. 113, 82 L.Ed. 141, we

think the order must be sustained on this point. The

restraint which the prohibition in question puts upon the

petitioners can be of little practical importance; it does

not preclude them from advertising that Clairol colors

permanently the hair to which it is applied.”’

See also FTC v. Mary Carter Paint Co., supra.

Thus, to show that speech is non-deceptive, an alleged of-

fender would have to show that it has no potential to deceive

even the most gullible person. This burden would cause a

defendant to have to undertake costly consumer surveys

which may be prohibitive. In fact, the Government

customarily in proving such cases does not even attempt such

an evidentiary burden but instead relies on ‘‘expertise.’’

Standard Oil Co., supra, at 659.

Moreover, when faced with this expertise, an alleged of-

fender may find its burden impossible to sustain. Gelb,

supra; Mary Carter Paint Co., supra.

Furthermore, while on the one hand the Court of Appeals

puts the burden on defendant to show its speech truthful, on

the other hand, as in the case at bar, an alleged offender may

be given little if any opportunity to prove its case. Under the

statutory scheme of §3005, e/ seq., the Federal District Court

does not have jurisdiction to make a determination on the

merits of the case. Its power is limited to a determination of

whether probable cause exists to believe that a defendant is

engaged in false advertising. This probable cause hearing is

inadequate for a defendant to sustain the burden of proof

placed upon it by the Court of Appeals. First, little time is

generally provided in preparation for preliminary hearings.

In the case at bar, the Petitioner had eight working days to

prepare its defense of claims pertaining to fifteen products,

including procurement of expert witnesses and documentary

evidence. Second, since the Government need only show pro-

bable cause, even if a defendant presents a strong case, if the

evidence is highly conflicting the judge may be inclined to

rule in the Government’s favor on the basis of its **expertise’’

or role as protector of the public.

Requiring a defendant to assume the burden of proving its

speech to be truthful in order to exercise clearly protected, as

well as arguably protected, speech, in addition contravenes

those decisions condemning the imposition of affirmative

burdens as a condition to the exercise of speech. In Lamont

v. Postmaster Gen’l, 381 U.S. 301 (1965), this Court struck

down a statute prohibiting the delivery of mail deemed

*‘communist political propaganda’’ unless the addressee of

the mail requested delivery. Similarly, in Thomas v. Collins,

323 U.S. 516 (1945), this Court held unconstitutional a

statute which required labor organizers to register prior to

solicitation of persons for union membership. Clearly the

burden of proving speech to be truthful far exceeds the

burdens condemned in these two cases.

The third effect of the Court’s ruling is that if a defendant

fails to prove its speech truthful, excessive restraints may be

imposed. This is contrary to the principle that restraints of

speech must be narrowly tailored to serve a legitimate

governmental interest, not in excess of that necessary for the

Government to achieve its objective, and cannot be sustained

if the Government’s objective can be achieved by less restric-

tive means. Shelton v. Tucker, supra;Carroll, supra; Central

Hudson Gas, supra; Consolidated Edison, supra; Bellotti,

supra; Bates, supra; Pittsburgh Press Co., supra. This is also

squarely contrary to those federal Court of Appeals deci-

sions which applied this doctrine to commercial speech

found to be unprotected by the First Amendment by reason

that it constituted false or misleading advertising. Warner

Lambert Co., supra; Beneficial Corp., supra; Nat’l

Comm'n on Egg Nutrition, supra; Encyclopedia Brittanica,

supra. See also, Donaldson v. Read, supra; E.F. Drew v.

FTC, supra.

Finally, it is observed that although the threshold require-

ment for presuming speech illegal under the Fifth Circuit’s

decision is probable cause, in view of the deference given to

the acts of a legislature, it could as easily be found in a

legislative determination that speech of a particular content

is inherently deceptive, e.g., Bates, supra.

The Court of Appeals Misinterpreted Central Hudson Gas,

supra.

Third, Petitioner submits that certiorari should be granted

for the reason that the Fifth Circuit has misinterpreted Cen-

tral Hudson Gas, supra. In reaching its decision, the Court

of Appeals apparently relied on the following language in

Central Hudson Gas, supra,

**The First Amendment’s concern for commercial speech

is based on the informational function of advertising

[cits. omitted]. Consequently, there can be no objection

to suppression of commercial messages that do not ac-

curately inform the public about lawful activity. The

government may ban forms cf communications more

likely to deceive the public than inform it, Friedman v.

Rogers, 440 U.S. 1, 59 L.Ed.2d 100, 99 S.Ct. 887 (1979);

Ohralik v. Ohio State Bar Ass’n, 436 U.S. at 464, 465, 56

L.Ed.2d 444, 98 S.Ct. 912, or commercial speech related

to illegal activity, Pittsburgh Press Co. v. Pittsburgh

Comm’n on Human Relations, 413 U.S. 376, 388, 37

L.Ed.2d 669, 93 S.Ct. 2553 (1973).

If the communication is neither misleading nor related to

the unlawful activity the government’s power is more

subscribed.’’ 447 U.S. at p.563-564.

This language clearly does not address the issue as to what

limitation must, or need not, be observed in prio. restraints

of allegedly false commercial speech or speech subsequently

found to be false. It simply reiterates what was said in

Virginia, supra, at p.771,

“‘Obviously much commercial speech is not provably

false or even wholly false but only deceptive or

misleading. We perceive 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 en-

suring that the stream of commercial speech flows clean-

ly as well as freely.’’

Whether false commercial speech may be prohibited or

commercial speech regulated to protect the public from

deception or potential deception is not the issue at bar. What

is the issue is whether commercial speech may be subject to

prior or subsequent restraints which are unnecessary to and

do not significantly advance either of these objectives. Fur-

thermore, unlike the restraints sustained in Friedman v.

Rogers, 440 U.S. 1 (1979), and Ohralik v. State Bar Ass’n,

436 U.S. 447 (1978), or the ‘‘fencing in provisions”’ found in

FTC cease-and-desist orders, see TWA, Inc. v. FTC, 594

F.2d 212 (9h Cir. 1979), the restraints here are not pro-

phylactic measures designed to protect the public from

future potential deception. In fact, the restaints do not even

prevent an offender or an alleged offender from continuing

to make the representations found to be or alleged to be

false. Thus, the restraints are not designed to ensure ‘‘that

the stream of commercial information flows cleanly.’’

. Petitioner's Constitutional Challenge Raises Specific Issues

in the Realm of Commercial Speech which this Court has not

Resolved.

Finally, and to a limited extent, alternatively, certiorari

should be granted for the reason that the constitutional

challenge to these statutes and the injunction raises specific

issues in the realm of commercial speech which this Court has

not specifically considered. First and foremost is the issue

raised but not decided by this Court of whether the tradi-

tional doctrine of prior restraints is applicable to commercial

speech. See, e.g., Virginia, supra, at p.722, n.24; Central

Hudson Gas, supra, at p.571, n.13. If traditional prior

restraints are not applicable, what procedural safeguards

must be present? This case squarely presents this issue.

In addition, this Court has observed that the application

of First Amendment law to commercial speech is an un-

charted area. Friedman v. Rogers, supra, p.11, n.9. This

Court has never considered the application of the First

Amendment to commercial speech alleged to be or found to

be false but not connected with special interest economic

regulation. This case presents important issues in this precise

area.

Finally, this Court’s decision in Friedman, supra, presents

an ambiguity which should be clarified. Friedman suggests

that the doctrine of the less restrictive alternative and the re-

quirement that a restraint must significantly advance the

Government’s interest may be inapplicable to commercial

speech. /d., p.12,n.11; p.15,n.14. On the other hand, Fried-

man is contrary, on these two issues, to prior and subsequent

decisions by this Court. Bates, supra, p.374; Central Hudson

Gas, supra, p.564. Moreover, Friedman emphasized that the

issues involved trademarks which have no intrinsic meaning

and special interest economic regulations.

Finally, this Court emphasized,

‘*Texas has done no more than require that commercial

information * * * ‘in such form. ..as [is] necessary to

prevent its being deceptive.’’ 440 U.S. at p.16.

On the other hand, Friedman is the only case in which the

Court found that the speech subject to restraint was decep-

tive. This may or may not have implications for the case at

bar. This is an issue which this Court ought to clarify.

VIII. Conclusion

In conclusion, for these reasons a writ of certiorari should

issue to review the judgment and opinion in the Fifth Circuit

Court of Appeals.

T . BENHAM

Counsel of Record

JANIE F. DUNCAN

BENHAM & COHEN, P.C.

Suite 210, 6600 Powers

Ferry Road, N.W.

Atlanta, Georgia 30339

Tel. (404) 955-1118

~ Xipuaday

APPENDIX A

UNITED STATES POSTAL SERVICE,

Plaintiff-Appellee,

ATHENA PRODUCTS, LTD.

Defendant-Appellant.

No. 81-7303.

United States Court of Appeals,

Fifth Circuit.

Unit B

Aug. 27, 1981.

VANCE, Circuit Judge:

This case involves a challenge to the statutory scheme

autisorizing the United States Postal Service to prevent the ob-

taining of money through the mail by means of false representa-

tions. Appellant contends that the statutory provisions restrain

advertising in a manner inconsistent with the protection afforded

by the first amendment to commercial speech.

The congressional scheme is embodied in 39 U.S.C. § 3005 and

39 U.S.C. § 3007. Under section 3005' the Postal Service may in-

1. 39U.S.C. § 3005(a) provides in pertinent part: 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

representions * * *, 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 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 postmaster returns the mail to the sender; and

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

sentative 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.

A-l

stitute administrative proceedings to determine whether money is

being obtained through the mails by means of false representa-

tions. If a violation of section 3005 is established, that section

permits the post-master to return to sender mail and money

orders addressed to the violator. Section 3007’ enables the Postal

Service to obtain an injunction in district court to detain the mail

of an alleged violator during the pendency of administrative pro-

ceedings under section 3005. The statute specifies that an injunc-

tion be granted upon a showing of probable cause to believe that

section 3005 is being violated.

In February 1981, after instituting administrative proceedings

under section 3005, the Postal Service filed the present suit

against Athena Products, Ltd. under section 3007. Athena Pro-

ducts sells ‘‘health’’ products through the mails. It solicits orders

for these products through advertisements in its own bi-monthly

magazine, Soma, and through other publications. Each issue of

Soma contains an order blank to be mailed to the address adver-

tised in that issue along with payment for the desired products.

This suit concerns alleged misrepresentations regarding fifteen

advertised products.

At the hearing in district court in March 1981, both parties

presented affidavits and testimony from expert witnesses as to

the truth of the claims made in the advertising for the fifteen pro-

ducts. In its careful review of the evidence, the district court

divided the fifteen products into three general categories: those

2. 39U.S.C. § 3007(a) provides:

In preparation for or during the pendency of proceedings under

sections 3005 and 3006 of this title, the United States district court in

the district in which the defendant receives his mail shall, upon ap-

plication therefor by the Postal Service and upon a showing of prob-

able cause to believe either section is being violated, enter a temporary

restraining order and preliminary injunction pursuant to rule 65 of

the Federal Rules of Civil Procedure directing the detention of the

defendant’s incoming mail by the postmaster pending the conclusion

of the statutory proceedings and any appeal therefrom. The district

court may provide in the order that the detained mail be open to ex-

amination by the defendant and such mail be delivered as is clearly not

connected with the alleged unlawful activity. An action taken by a

court hereunder does not affect or determine any fact at issue in the

statutory proceedings.

claimed to cause weight loss and figure modification’, those

advertised primarily as rejuvenating agents’, and a third group of

miscellaneous products.’ The court concluded that the plaintiff

had gone substantially beyond meeting its burden of showing

that probable cause existed to believe that Athena’s adver-

tisements were ‘‘reasonably calculated to deceive persons of or-

dinary prudence and comprehension.’’ United States v. Outpost

Development Corp., 369 F.Supp. 399, 402 (C.D.Calif.), aff'd,

414U.S. 1105, 94S.Ct. 832, 38 L.Ed.2d 733 (1973). Athena does

3. An example of the weight-loss group is Cellulite TR3:

The unique TR3 formula features niacin, a natural and highly effec-

tive vasodilator, that causes every blood vessel and capillary to open

up and flush itself out with fresh, cleansing blood. When used in the

special time-release formula, niacin can even open the tiny capillaries

in your cellulite-choked tissues so that your blood can remove ac-

cumulated wastes and also prevent their buildup. And, to assist in

cleaning out the debris, Cellulite TR3 contains herbal diuretics that

enable your body to quickly eliminate toxins while preventing the

water retention that aggravates cellulite.

R. 143.

4. Anexample of the rejuvenating group is RNA:

Don’t let your body grow old before it’s time. RNA helps slow the ag-

ing process before it stops you from enjoying life * * * The effects

from RNA therapy seem almost miraculous. But when you consider

that properly functioning RNA can essentially hold back the hands of

time to keep you young and energetic, you can see why supplemental

RNA can have such a tremendous impact.

R. 58.

5. The district court described this third group as follows:

These products primarily provide vitamin and mineral supplements.

Defendant expressly claims that these products will ‘‘help you im-

prove your sexual performance and confidence’’ (Euzinc-D), “‘pre-

vent the corrosive effects of oxidation from weakening your heart,

muscles and other vital organs’’ (Ex-Sel), ‘‘improve your memory,

thinking and concentration’’ and ‘‘measurably raise intelligence’’

(Food for Thought), ‘‘minimize the damaging effects of pollution on

your looks and health’’ (Meta-E), cure “‘tension-caused sleeplessness

and chronic insomnia’’ (Natural Calm), “‘prevent fatigue, facial

pallor and brittle, dull fingernails’’ and prevent ‘‘water retention,

hormone imbalance,”’ and ‘‘dry, cracked lips’’ (Althena Nutrition

for Women), prevent deficiencies that ‘‘lead to hypoglycemia,

hyperglycemia and diabetes’’ (Chromill-GTF), and give you ‘‘a fast

burst of energy’’ (Power Tabs).

A-3

not contend that we should overturn this determination.

In accordance with its findings, the district court issued an

order directing the postmaster to detain all of Athena’s incoming

mail addressed to designated post office boxes and street ad-

dresses. The order also prohibited Athena from soliciting orders

for the fifteen products to other post office boxes. The order

provided that Athena could examine its mail and collect items

unconnected with the alleged unlawful activities. Recognizing

that Athena was ‘‘entitled to a speedy resolution of this matter

by the USPS”’ the court limited the preliminary injunction to a

period not to exceed 120 days.

On appeal, Athena pursues constitutional challenges rejected

by the district court. Chief among these challenges is Athena’s

claim that the ‘‘chilling effect’’ of the statutory scheme upon its

advertising infringes impermissibly upon its first amendment

rights and those of the public. While no direct prohibition on

speech is involved, Athena is obviously deterred from advertising

products for which it cannot fill orders.

Athena relies heavily on the Supreme Court’s opinion in

Blount v. Rizzi, 400 U.S. 410, 91 S.Ct. 423, 27 L.Ed.2d 498

(1971) which struck down a statutory scheme virtually identical

to that in this case enabling the postmaster to proceed against

persons believed to be selling obscene materials through the

mails. The Court held that the statutes did not possess the

characteristics required by the decision in Freedman v.

Maryland, 380 U.S. 51, 85 S.Ct. 734, 13 L.Ed.2d 649 (1965). The

scheme did not place the burden of initiating judicial review on

the Postal Service; nor did it provide for prompt judicial review.

Similarly, the statute authorizing detention of mail during the

pendency of administrative proceedings upon a showing of pro-

bable cause failed to meet the requirement that ‘‘[a}ny restraint

imposed in advance of a final judicial determination on the

merits must. ..be limited to preservation of the status quo for

the shortest fixed period compatible with sound judicial discre-

tion.’ Blount v. Rizzi, 400 U.S. at 421,91 S.Ct. at 430 (quoting

Freedman v. Maryland, 380 U.S. at 59, 85 S.Ct. at 739).

Subsequent to the decision in Blount v. Rizzi, however, the

Supreme Court twice upheld the validity of the statutes at issue in

this case. In Lynch v. Blount, 404 U.S. 1007, 92 S.Ct. 673, 30

L.Ed.2d 656 (1972), aff’g 330 F.Supp. 689 (S.D.N.Y.1971) the

A-4

Supreme Court affirmed the opinion of a three judge court

holding that ‘‘the safeguards defined in Blount v. Rizzi [citation

omitted] for obscenity cases are wholly inappropriate, un-

necessary and inapplicable to the field of commercial fraud.”’

330 F.Supp. at 694. The principal distinction drawn by the lower

court in reaching its judgment was that unlike obscenity, ‘‘[a]

scheme to defraud by false representations can be objectively

proved by evidence in an administrative hearing without going

through the delay of a trial before a judge. Good old-fashioned

schemes to defraud by the use of false representations are as old

as the hills, and as easily recognized once the issues of credibility

have been resolved.’’ 330 F.Supp. a 695. The court also drew

support from Supreme Court decisions upholding legislation

authorizing the Postal Service to investigate commercial frauds

and to issue stop orders. Jd. at 692 (citing Donaldson v. Read

Magazine, Inc. 333 U.S. 178, 68 S.Ct. 591, 92 L.Ed. 628 (1948);

Public Clearing House v. Coyne, 194 U.S. 497, 24S.Ct. 789, 48

L.Ed. 1092 (1904)). Lynch v. Blount involved only section 3005.

The following year, however, the Supreme Court upheld the con-

stitutionality of section 3007 as wellin United States v. Outpost

Development Corp., 441 U.S. 1105, 94 S.Ct. 832, 38 L.Ed.2d

733 (1973), aff’g. 369 F.Supp. 399 (C.D.Calif.1973). Accord,

United States Postal Service v. Beamish, 466 F.2d 804 (3d Cir.

1972).

This considerable body of precedent is not dispositive of the

present case, however, since it predates the Court’s holding in

Virginia State Board of Pharmacy v. Virginia Citizens Consumer

Council, Inc., 425 U.S. 748, 96 S.Ct. 1817, 48 L.Ed.2d 346

(1976) that unwarranted governmental regulation of commercial

speech infringes upon the first amendment rights of both speaker

and listener. The present case thus poses the question whether

Lynch v. Blount and United States v. Outpost Development

Corp. survive Virginia Board and subsequent cases, or whether

Blount v. Rizzi is now applicable even where only commercial

speech is restrained.

In Virginia Board the Court made clear that it did not intend

by its decision to impair the government’s ability to regulate

misleading or deceptive speech. ‘‘Obviously much commercial

speech is not provably false, or even wholly false, but only decep-

tive and misleading. We forsee no obstacle to a State’s dealing ef-

A-5

fectively with this problem.’’ 425 U.S. at 771, 96 S.Ct. at 1830.

The Court went on to note that ‘‘[t}here are commonsense dif-

ferences between speech that does ‘no more than propose a com-

mercial transaction’ . . . and other varieties. Even if the dif-

ferences 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

necessary to insure that the flow of truthful and legitimate com-

mercial information is unimpaired.”’ /d. at 771 n.24, 96 S.Ct. at

1830 (citation omitted). The differences noted by the Court were

primarily practical. The truth of commercial speech may be more

easily verified by its disseminator than in the case of news report-

ing or political commentary. Moreover, the chilling effect of _

government regulation would be mitigated by the urgency of the

profit motive. /d.

{1,2} In his concurring opinion, Justice Stewart drew more

fundamental distinctions contrasting commercial speech with

**ideological expression.’’ Ideological expression ‘‘is integrally

related to the exposition of thought—thought that may shape

our concepts of the whole universe of man.’’ /d. at 779, 96 S.Ct.

at 1834. The truth or falsity of any information contained in such

speech is irrelevant in according first amendment protection. In

contrast, commercial speech is valued only because of the infor-

mation conveyed, ‘‘rather than because of any direct contribu-

tion to the interchange of ideas.’’ /d. at 780, 96 S.Ct. at 1835.

Thus government measures to insure accuracy are appropriate in

the context of commercial speech although they would be repug-

nant elsewhere.

In the years since Virginia Board the Court has repeatedly em-

phasized that its decisions offer commercial speech only ‘‘a

limited measure of protection, commensurate with its subor-

dinate position in the scale of First Amendment values, while

allowing modes of regulation that might be impermissible in the

realm of noncommercial expression.’’ Ohralik v. Ohio State Bar

Association, 443 U.S. 447, 456, 98 S.Ct. 1912, 1918, 56 L.Ed.2d

444 (1978). Accord, Central Hudson Gas & Electric Corp. v.

Public Service Commission, 447 U.S. 557, 562-63, 100 S.Ct.

2343, 2349-2350, 65 L.Ed.2d 341 (1980); Friedman v. Rogers,

440 U.S. 1, 10, 99S.Ct. 887, 894, 59 L.Ed.2d 100(1979); Bates v.

A-6

State Bar of Arizona, 433 U.S. 350, 380-81, 97 S.Ct. 2691, 2707,

53 L.Ed.2d 810 (1977).°

{3] The care with which the Court has distinguished commer-

cial from noncommercial speech indicates that its decisions

upholding the constitutionality of sections 3005 and 3007 retain

their vitality. The Court’s clear concern to permit effective

regulation of deceptive advertising and its suggestion that the

prohibition against prior restraints may be inapplicable where

commercial speech is concerned, Virginia Board, 425 U.S. at 771

n.24, 96 S.Ct. at 1830, negate any suggestion that prompt

judicial review initiated by the censor is required whenever the

government undertakes to regulate misleading advertising. This

judgment reflects not only the ‘‘subordinate position in the scale

of First Amendment values’’ allotted to commercial speech,

Ohralik, 436 U.S. at 456, 98 S.Ct. at 1918, but the comparative

difficulties inherent in determining obscenity and misleading

advertisement noted by the court in Lynch v. Blount. We con-

clude therefore that the decision in Lynch v. Blount upholding

section 3005 remains good law. Accord, Original Cosmetics Pro-

ducts, Inc. v. Strachan, 459 F.Supp. 496 (S.D.N.Y.1978), aff'd

603 F.2d 214 (2d Ci), cert. denied 444 U.S. 915, 100S.Ct. 229, 62

L.Ed.2d 170 (1979).

[4-6] Of greater concern is the ability of the Postal Service

under section 3007 to obtain an injunction detaining defendant’s

mail upon a showing of probable cause. The Court has indicated

that the legislature is to be accorded considerable deference in

regulation of misleading advertising even to the extent of per-

mitting prior restraints. A section 3007 injunction therefore does

not appear to trench upon first amendment values. Even though

such an injunction may occasionally restrain accurate commer-

cial speech for a period, the restraint is only temporary and the

procedures provided insure against baseless government censor-

ship. Counsel for Athena points out, however, that an injunction

issued under section 3007 may last for the duration of ad-

ministrative proceedings under section 3005, and that these pro-

ceedings may extend over a protracted period. While the govern-

6. For a concise analysis of the characteristics distinguishing commercial

speech from speech protected under traditional first amendment theories

see Jackson & Jeffries, Commercial Speech: Economic Due Process and

the First Amendment, 65 Va.L.Rev. 1 (1979).

A-7

ment may restrain commercial speech prior to a final determina-

tion on the merits in a manner that would be unconstitutional

where noncommercial speech is concerned, the first amendment

protects against erroneously imposed prior restraints of excessive

duration even in the area of commercial speech. See Space Age

Products, Inc. v. Gilliaml, 488 F.Supp. 775, 784 (D.Del.1980).

Injunctions granted under section 3007 should therefore extend

no longer than necessary for a prompt administrative determina-

tion on the merits conducted in the section 3005 proceeding. The

district court met this requirement, noting that Athena was en-

titled to a speedy resolution in the administrative hearing, and

carefully limiting the preliminary injunction to a period not to

exceed 120 days.

Athena alleges that section 3007 reaches too broadly because it

requires it to sort through all its mail and demonstrate which

items are unrelated to the alleged deceptive advertising. Relying

on Central Hudson Gas, 447 U.S. at 565-66, 100 S.Ct. at

2350-51, it asserts that the burden is on the government to

demonstrate that its objective could not be more narrowly

achieved. In Central Hudson Gas, the Court stated that whether

a government regulation is more extensive than necessary only

becomes a relevant question once it has been determined that the

speech is not misleading. /d. at 563-64, 100 S.Ct. at 2350. The

Court carefully avoided extending safeguards applicable to non-

commercial speech to the regulation of misleading advertising.

Id, at 566, 100 S.Ct. at 2351. But see Beneficial Corp. v. FTC,

542 F.2d 611, 620 (3d Cir. 1976), cert. denied, 430 U.S. 983, 97

S.Ct. 1679, 52 LEd.2d 377 (1977) (‘‘[A] remedy, even for decep-

tive advertising, can go no further than is necessary for the

elimination of the deception.’’).

{7} Athena argues almost in passing that the detention of its

mail upon a showing of probable cause does not afford it due

process of law.’ In determining whether section 3007 provides

7. Precisely what constitutes a showing of probable cause under § 3107 is

unclear. Our researches into the legislative history have not disclosed

anything bearing on the question. As a practical matter, however, the

district court appears to have operated in much the same way as if it were

evaluating an attempt to show ‘‘probable success on the merits’’ in the

usual preliminary injunction hearing. Other courts behave similarly. See,

e. g., United States Postal Service v. Oriental Nurszries, 491 F.Supp. 1265

(S.D.Fla. 1980).

adequate procedural protection, we must examine the competing

interests asserted by the two parties and the risk of erroneous

deprivation inherent in the procedures used. Mathews v.

Eldridge, 424 U.S. 319, 335, 96 S.Ct. 893, 903, 47 L.Ed.2d 18

(1976). The effect of an injunction of this kind upon a mail order

house may be considerable. Athena is prevented from conduct-

ing business in the fifteen products at issue for its duration.

These products constitute a substantial portion of the company’s

business. Because customer orders remain inexplicably unfilled,

the injunction may result in consumer disaffection. On the other

hand, the government asserts an important interest, identified by

Congress, in protecting the public from the type of deception

alleged in this case. Our inquiry thus focuses upon the risk of

erroneous deprivation. In the course of the hearing before a

federal judge, both parties presented considerable expert

evidence. Several briefs were submitted. The detailed opinion of

the district judge reflects the care with which argument and

evidence were analyzed. Despite the fact the court assessed the

evidence against a standard of probable cause, the hearing af-

forded in this case minimized the risk of an erroneous depriva-

tion while accomplishing the important goal of preventing the

perpetration of an allegedly fraudulent scheme prior to the final

administrative decision on the merits. Accordingly, we conclude

that the requirements of due process have been met. We do not

wish, however, to understate the potential adverse effects of this

kind of order for Athena or future defendants in similar cases.

These defendants are entitled to prompt administrative resolu-

tions of their cases. Accordingly, as we have already held on first

amendment grounds, injunctions granted under section 3007

should not extend longer than necessary for a prompt ad-

ministrative determination.

8. Although it involves obvious differences, the Supreme Court’s decision in

Barry v. Barchi, 443 U.S. 55, S.Ct. 2642, 61 L.Ed.2d 365 (1979) is instruc-

tive in our due process analysis. In Barchi, a race norse trainer complained

that he had been deprived of due process when his license was suspended

without either a presuspension or a prompt postsuspension hearing. The

Court held that ‘‘the State is entitled to impose an interim suspension,

pending a prompt judicial or administrative hearing that would definitely

determine the issues, whenever it has satisfactorily established probable

cause to believe [the existence of trainer misconduct].’’ 443 U.S. at 64, 99

A-9

[8] Finally, Athena contends that it was given an insufficient

time to prepare its defense and was denied due process as a result.

This contention is without merit. Compare the facts of the pres-

ent case with Marshall Durbin Farms, Inc. v. National Farmers

Organization, Inc., 446 F.2d 353 (Sth Cir. 1971).

The order issued by the district court in this case conforms to

the requirements of the first amendment and due process.

Accordingly, it is affirmed.

AFFIRMED.

S.Ct. at 2649. The Court made clear, however, that any ‘appreciable

delay in going forward with a full hearing’’ following the suspension

would violate due process. /d. at 66, 99 S.Ct. at 2650. The interest of the

trainer was comparable to that of Athena. As described by the three judge

court in the Barchi case, ‘*[t}he private interest at stake is, simply, the right

to a livelihood. Plaintiff has convincingly demonstrated that a trainer,

once his license is suspended, rightly or wrongly, is potentially subject to a

loss of clients and an irretrievable loss of income from any race meeting in

progress.’’ Barchi v. Sarafan, 436 F.Supp. 775, 781 (S.D.N.Y.1977). The

interest of the Postal Service in the present case is at least as strong as that

of the state’s interest in Barachi in maintaining the integrity of racing. The

procedural protection provided in the present case is significantly greater,

than that afforded in Barchi since probable cause was determined after a

full adversary hearing. In Barchi the trainer's license was suspended on the

basis of an untested report by a single expert which the trainer was not

given an opportunity to challenge.

A-10

APPENDIX B

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF GEORGIA

ATLANTA DIVISION

UNITED STATES POSTAL SERVICE }

CIVIL ACTION

VS.

NO. 81-358 A

See ee ee

ATHENA PRODUCTS, LTD.

ORDER

Plaintiff in this action, the United States Postal Service

(USPS), seeks a preliminary injunction directing the detention of

defendant’s incoming mail during the pendency of a statutory

administrative proceeding. Defendant Athena Products, Ltd.

sells a variety of products through the mail that are advertised by

defendant as curing or preventing certain diseases and conditions

and retarding the aging process. Through advertisements in

nationally-circulated publications and its own bi-monthly

magazine, Soma, as well by direct mail newsletters and adver-

tisements, Athena solicits orders for its ‘‘heaith’’ products

through the mail. Plaintiff alleges that defendant is conducting a

scheme for obtaining money by means of false represenations in

contravention of 39 U.S.C. § 3005.

The USPS has instituted administrative proceedings against

Athena under 39 U.S.C. § 3005. Section 3005 provides, in part:

(a) Upon evidence satisfactory to the Postal Service that any

person is engaged in conducting a scheme or device for ob-

taining money or property through the mail by means of false

B-1

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 represen-

tative, to return such mail to the sender appropriately

marked as in violation of this section, if the person, or his

representative, is first notified and given reasonable op-

portunity 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.

Plaintiff contends that the claims made in defendant’s advertis-

ing regarding fifteen Athena products are false. The products

that are the subject of the pending administrative proceeding are:

(1) RNA, (2) RX for Aging, (3) Euzinc-D, (4) Cellulite P.M., (5)

Cellulite TR3, (6) Ex-Sel, (7) Food for Thought, (8) Meta-E, (9)

Natural Calm, (10) Athena Nutrition for Women, (11) Chromill-

GTF, (12) Power Tabs, (13) Athena Stay young Program, (14)

Youth Factor, and (15) In-Trim or Control.

Plaintiff seeks relief from this court under 39 U.S.C. § 3007.

Section 3007(a) provides:

In preparation for or during the pendency of proceedings

under sections 3005 and 3006 of this title, the United States

district court in the district in which the defendant receives

his mail shall, upon application therefor by the Postal Ser-

vice and upon a showing of probable cause to believe either

section is being violated, enter a temporary restraining order

and preliminary injunction pursuant to rule 65 of the Federal

Rules of Civil Procedure directing the detention of the defen-

dant’s incoming mail by the postmaster pending the conclu-

sion of the statutory proceedings and any appeal therefrom.

The district court may provide in the order that the detained

B-2

mail be opened to examination by the defendant and such

mail be delivered as is clearly not connected with the alleged

unlawful activity. An action taken by the court hereunder

does not affect or determine any fact at issue in the statutory

proceedings.

Plaintiff asks that this court enter an order directing the deten-

tion of Athena’s mail at eight enumerated post office boxes and

one street address, and restraining defendant from soliciting

money in regard to these products through any additional ad-

dresses until the conclusion of the administrative proceedings.

The order would be subject to defendant’s right to examine and

have delivery of any mail not related to the alleged unlawful ac

tivity.

Defendant raises several defenses to plaintiff’s application for

an injunction. Defendant contends, first, that equitable con-

siderations bar plaintiff’s request for preliminary injunctive

relief; the USPS should be barred by laches from bringing this

suit. Second, defendant argues that a preliminary injunction

under 39 U.S.C. §3007 would violate defendant's rights under

the First Amendment of the United States Constitution. Third,

defendant contends that in any event, plaintiff has failed to meet

its burden under section 3007 on a ‘‘probable cause’’ or any

other standard of showing the falsity of the claims made for

Athena products.

The application of the USPS for an injunction detaining

defendant’s mail came before the court for a hearing on March

12, and 16, 1981, during which the parties presented extensive ex-

pert and other testimony in support of their contentions. For the

reasons that follow, we will grant plaintiff limited injunctive

relief under section 3007.

I. Equitable Defense

Defendant contends that plaintiff’s application for injunctive

relief should be barred because plaintiff has delayed

unreasonably in bringing suit against Athena. The thiust of

defendant’s argument is that the USPS knew of the advertising

and sale of the fifteen products that are the subject of this suit,

B-3

and purchased some of the products, in May or June of 1980. In

addition, as other USPS administrative proceedings have been

pending against defendant since July 1979, the USPS must have

been aware of Soma magazine and Athena’s products even

earlier than the spring of 1980.

The defense of laches is ‘‘principally a question of the inequity

of permitting the claim to be enforced, an inequity founded on

some intermediate change in conditions.’’ Bleckley v. Bleckley,

189 Ga. 47, 5 S.E.2d 206 (1939). Defendant has made no showing

that the alleged six months to one year ‘‘delay”’ in bringing suit

has prejudiced it in any way, or rendered the ascertainment of

truth in this case difficult. See, e.g., Johnson v. Sears, 199 Ga.

432, 34S.E.2d 541 (1945). The necessity of defending a suit is not

the type of ‘‘prejudice’’ against which the defense of laches pro-

tects.

Il. Constitutional Defense

Defendant’s strongest argument against the imposition of the

relief requested in this case is that section 3007 is unconstitu-

tional as an infringement of defendant’s First Amendment

rights. The detention of Athena’s mail will violate its constitu-

tional rights, defendant argues, because the statute permits the

undue restriction of protected speech without providing

constitutionally-required safegards.

Title 39 of tiie United States Code protects against the use of

the mails for soliciting money by means of false representations,

or soliciting money for obscene materials. Section 3005, the sec-

tion involved in this action, authorizes the USPS to take steps to

deny the use of the mails to those who engage in false advertising

or representations. Section 3006, formerly section 4006,

establishes the same prohibitions for dealers in obscenity.

Defendant relies primarily on the analysis of United States v.

Book Bin, 306 F. Supp. 1023 (N.D. Ga. 1969) which was affirm-

ed by the Supreme Court in Blount v. Rizzi, 400 U.S. 410 (1971).

In Blount, the Supreme Court affirmed the three-judge district

court’s holding in Book Bin that the statutory administrative

scheme of censorship set up by 39 U.S.C. § 4007, which is now

section 3007, and 39 U.S.C. §4006, now section 3006, was ur-

constitutional as it related to the detention and regulation of

B-4

obscene materials. The Court found that the statutory scheme

violated the constitutional rights of the persons whose mail was

detained because it lacked adequate safegards against the undue

inhibition of protected expression. In particular, the Court

found that the statutory scheme failed to meet the tripartite pro-

cedural requirements of Freedman v. Maryland, 380 U.S. 51

(1965), governing consorship: (1) the burden of initiating judicial

reveiw must be on the censor, (2) prompt judicial review in the

form of a final judicial determination on the merits must be pro-

vided and (3) restraints imposed to preserve the status quo in ad-

vance of a final judicial interpretation must be in limited to the

shortest possible time. The Court found fatal defects in the

Postal Service’s scheme for controlling the use of the mails for

selling or disseminating obscenity under all three elements of the

Freedman test.

First, section 4006 did not require that the Postmaster General

seek a prompt judicial determination of obscenity. Instead, after

an administrative determination of obscenity the Postmaster

General could stamp unlawful and return to the senders the

orders for purchases of magazine or other materials. This could

act as an unlawful restraint. Second, once obscenity was deter-

mined in the administrative proceedings, the burden shifted to

the defendant to institute a judicial appeal and persuade the

court that the materials are protected expression. The authority

of the Postmaster General to apply to a district court under sec-

tion 4007 for an order directing the detention of the defendant’s

incoming mail pending conclusion of the administrative pro-

ceedings did not cure the defects in the statute. Because the ap-

plication for a detention order was discretionary with the

Postmaster General, and the district court could grant the order

merely upon a showing of ‘‘probable cause,”’ the district court’s

intervention could not function as a substitute for ‘‘prompt

judicial review on the issue of obscenity.’’ Blount v. Rizzi, 400

U.S. at 420. Third, section 4007 failed to provide that any

restraint imposed prior to a judicial determination to preserve

the status quo would be limited to the shortest possible time.

Defendant argues that, because the Supreme Court held in

1976 that commercial speech is protected by the First Amend-

ment, the rationale of Blount applies with as much force to the

statutory regulatory scheme created by sections 3005 and 3007,

B-5

as it does to sections 3006 and 3007. Virginia State Board of

Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S.

748 (1976). The statutes do not require the USPS to seek a

prompt judicial determination of the falsity of the advertising

claims. The scheme also permits the detention of purchase orders

for products that were solicited by the allegedly false advertising

on a showing of mere ‘probable cause’’, and places the burden

on defendant of initiating judicial proceedings. The defendant’s

analogy of the instant case to Blount is, however, inapposite.

The Supreme Court’s scrutiny of the USPS’s regulatory

scheme in Blount focused expressly on the constitutional right of

the defendant, a retail magazine distributor, to sell and

disseminate allegedly obscene matter, and implicity on the pur-

chasers’ or public’s right to buy and receive those materials.

Because sections 4006 and 4007 did not meet Freedman stan-

dards for a prompt full judicial determination of the issue of

obscenity, the defendant’s First Amendment right to free

expression was inhibited. (In the instant case, however, the

defendant’s commercial expression is only tangentially im-

plicated.) The First Amendment protects communication. The

USPS seeks an order detaining only purchase orders for the pur-

chase orders for the products for which defendant has allegedly

made false claims. It does not seek to halt the making of the

claims or to impound defendant's advertising. Plaintiff does not

seek to enjoin defendant from publishing or distributing its

magazine Soma, or from placing advertisements in other

publications. Thus, a temporary detention of defendant’s in-

coming mail would not prohibit defendant from disseminating

commercial information or prohibit the public from receiving

that information. Cf. Beneficial Corp. v. FTC, 542 F.2d 611 (3d

Cir. 1976), cert. denied, 430 U.S. 983 (1977) (regulation of adver-

tising by FTC cannot be overboard). The only result of the deten-

tion of defendant’s mail would be a delay in the receipt and fill-

ing of orders for Athena products. Unlike the obscenity cases,

the statutory scheme in this instance does not act to censor any

form of expression. '

Even though a preliminary injunction would not suppress

‘Defendant has not filed a cross-complaint seeking an injunction of the

administrative proceedings or a declaration that the postal statutes are

unconstitutional. We therefore address plaintiff's First Amendment

B-6

defendant’s right to commercial speech, however, the statutory

scheme at issue here may have a potential ‘‘chilling’’ effect on

that expression. If Athena cannot respond to customers’ pur-

chase orders due to government interference with its mail, defen-

dant alleges that, as a practical matter, its right to adveritse is in-

hibited. It is not good business to continue to solicit through

advertisements orders that cannot be filled. Therefore, the mail

detention ‘‘chills’’ defendant’s protected right to commercial

speech.

The Supreme Court has never indicated that the full panoply

of constitutional safeguards that protect political and ideological

speech and expression from prior restraint attach with equal

force to commercial speech. We can find no authority for the

proposition that the same prompt judicial determination on the

merits that is required before expression can be prohibited as

‘‘obscene”’ is similarly mandated before commercial speech can

be restrained as ‘‘false.’’ The Court has, in fact, suggested the

opposite. In Virginia Board of Pharmacy, which extended First

Amendment protection to commercial speech, the Court stated:

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 pro-

pose a commercial transaction,” ...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 dif-

ferent degree of protection is necessary to insure that the

flow of truthful and legitimate commercial information 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 or-

dinarily the advertiser seeks to disseminate informtion

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,

arguments merely as defenses to plaintiff’s claim for preliminary relief under

section 3007.

B-7

there is little likelihood of its being chilled by proper regula-

tion and forgone entirely.

Attributes such as these, the greater objectivity and har-

diness of commercial speech, may make it less necessary to

tolerate inaccurate statements for fear of silencing the

speaker...They may also make it appropriate to require

that a commercial message appear in such a form, or include

such additional information, warnings, and disclaimers, as

are necessary to prevent its being deceptive...

425 U.S. at 771 n. 24 (citations omitted). Because the advertiser

ordinarily ‘‘seeks to disseminate information about a specific

product or service that he himself provides and presumably

knows more about than anyone else,’’ there is little ‘‘danger

that governmental regulation of false or misleading price or pro-

duct advertising will chill accurate and nondeceptive commer-

cial expression,’’ and there is ‘‘little need to sanction ‘some

falsehood in order to protect speech that matters.’ ’’ /d at 771 n.

24; 777-78 (Stewart, J., concurring). Thus, the procedural

safeguards that must be employed before expression can be

restrained as obscene, are inappropriate when testing the ‘‘falsi-

ty’’ of commercial speech. See Lynch v. Blount, 330 F. Supp.

689, 694-95 (S.D.N.Y. 1971), aff’d 404 U.S. 1007 (1972). See

also Original Cosmetics Products, Inc. v. Strachan, 459 F.

Supp. 496, 498 (S.D.N.Y. 1978), aff'd, 603 F. 2d 214 (2d Cir.),

cert. denied, 444 U.S. 915 (1979). The Court would appear,

therefore, to allow the government broader power to suppress

false advertising than to censor other forms of expression.

We believe that under the Postal Service’s statutory scheme,

there is little likelihood that accurate commercial speech will be

chilled. Defendant’s First Amendment rights will not be in-

fringed by the imposition of a detention order on defendant’s

incoming mail.

Ill. Substantive Claims: Falsity of the Advertising

Having rejected defendant’s initial defenses to these pro-

ceedings, we next turn to the questions of whether the USPS has

made a showing that there is probable cause to believe that

Athena is violating the provisions of 39 U.S.C. §3005. After ful-

ib-d

ly reviewing the evidence, we believe such a showing has been

made.

As a threshold matter, defendant argues that the standard of

proof to be applied in this instance is not “‘probable cause,”’ but

the traditional and more stringent test for injunctive relief of

‘‘irreparable harm’”’ and ‘‘likelihood of success on the merits.”’

The statute provides that the district court shall enter an injunc-

tion detaining the defendant’s mail pursuant to Rule 65, Fed. R.

Civ. P., on a showing of ‘‘probable cause.’’ The reference to

Rule 65 in the statute, defendant argues, incorporates the stan-

dards for relief usually required under that rule.

In United States Postal Service v. Beamish, 466 F. 2d 804 (3d

Cir. 1972), the Third Circuit held that the reference to Rule 65 in

the statute merely delineates the procedural mechanics ap-

plicable to the hearing on probable cause. It does not incor-

porate the common law standards of the rule as well. The stan-

dard of ‘‘probable cause’’ expressly set out in the statute is to be

applied. Even under this lenient test, however, ‘‘due respect

must be accorded defendant’s constitutional rights by requiring

the Postal Service to meet clearly its burden under §3007 of

demonstrating probable cause of a §3005 violation.’’ Jd. at 807.

We agree with the court in Beamish that the proper showing

required of plaintiff in this case is that of ‘‘probable cause.’’

Plaintiff must show that there is probable cause to believe that

defendant’s scheme ‘‘is reasonably calculated to deceive persons

of ordinary prudence and comprehension.’’ United States v.

Outpost Development Corp., 369 F. Sup. 399 (C.D. Cal.),

aff'd, 414 U.S. 1105 (1973). Here, plaintiff has not only met but

has gone substantially beyond that test.

The advertisements for the Athena products which are the

basis of this lawsuit make various claims of the therapeutic ef-

fects of the products on the health of the consumers who use

them. The products are different types of vitamin and mineral

tablets which are ingested, and one topical cream to be applied to

the skin. For the purpose of our review, the products can be

loosely broken down into three groups.

In the first group are the products which defendant claims will

cause weight loss and figure modification. Included in this group

are Cellulite P.M., Cellulite TR3, and In-Trim (formerly Con-

trol). Use of Cellulite P.M., defendant advertises, will break up

B-9

‘cellulite even while you sleep’’ by ‘‘speeding up the elimination

of the wastes and toxins that combine with fatty tissues to form

cellulite.’’ Similarly, Cellulite TR3 can ‘‘dissolve those ugly lum-

py fat deposits forever’’ by stimulating the circulatory system

**to open up and flush out these hard-to-reach deposits.’’ In-

Trim provides ‘‘PPA”’ (phenylpropanolamine) which ‘‘has been

shown to be just as effective as prescription appetite sup-

pressants’’ and ‘‘is completely safe for dieters.’’

The second group includes RNA, RX for Aging, Youth Fac-

tor, and the Athena Stay Young Program. Among other

purported beneficial effects, all of the products in this group are

advertised primarily as rejuvenating agents and as supplements

which will prolong youth. Some of the representative claims

made by defendant for these products are that the ingestion of

RNA tablets replaces ‘‘dead or decaying RNA”’ in the body,

fades age spots, smooths wrinkles in the skin, and increases

energy and sex drive. RX for Aging, a topical skin cream, will en-

courage ‘‘the renewed growth of firm, healthy skin tissue.”

Youth Factor, formulated with ‘‘anti-aging ingredients,’’ pro-

vides superoxide dismutase which protects the body and skin

from the aging process and also contains placenta, the ‘‘key fac-

tor’’ in “‘live cell therapy”’ which retards aging. The Athena Stay

Young Program involves a regimin of four Athena products:

RNA, Meta-E, Ex-Sel, and Chromill-GTF. This program is for

**people who want to delay the onset of the effects of aging, as

well as those who want to reduce existing age symptoms.”’

tn the third and final group fall the remaining miscellaneous

eight products: Euzinc-D, Ex-Sel, Food for Thought, Meta-E,

Natural Clam, Athena Nutrition for Women, Chromill-GTF,

and Power Tabs. These products primarily provide vitamin and

mineral supplements. Defendant expressly claims that these pro-

ducts will ‘‘help you improve your sexual performance and con-

fidence’ (Euzinc-D), ‘‘prevent the corrosive effects of oxidation

from weakening your heart, muscles and other vital organs’’

(Ex-Sel), ‘‘improve your memory, thinking and concentration’”’

and ‘‘measurably raise intelligence’ (Food for Thought),

‘*minimize the damaging effects of pollution on your looks and

health’? (Meta-E), cure ‘‘tension-caused sleeplessness and

chronic insomnia’ (Natural Calm), ‘‘prevent fatigue, facial

pallor and brittle, dull fingernails’’ and prevent ‘‘water rcten-

B-10

tion, hormone imbalance,’’ and ‘‘dry, cracked lips’’ (Athena

Nutrition for Women), prevent deficiencies that ‘‘lead to

hypoglycemia, hyperglycemia and diabetes’’ (Chromill-GTF),

and give you ‘‘a fast burst of energy’’ (Power Tabs).

Both plaintiff and defendant presented affidavits and

testimony from expert witnesses as to the truth or falsity of the

claims made by Athena in its advertising for the fifteen

enumerated products. The USPS relied primarily on the

testimony of a doctor of pharmacology and a medical doctor

with an expertise in nutrition. The doctor of pharmacology

testified as to the established scientific methods of controlled

clinical experimentation for testing the efficacy of drugs and

other biological agents. Comparing the ingredients listed on the

labels of the Athena products to the claims made in the advertis-

ing for the products, both of the doctors stated that there is no

scientific evidence to support the therapeutic claims made by

defendant.

Some of the claims are, in fact, ‘‘inane’’ according to the doc-

tor’s testimony. For example, the oral consumption of the yeast

RNA in the product RNA, or the superoxide dismutatse and

placenta in Youth Factor, will simply be digested as any other

protein or foodstuff. The claim that ingestion of the product

RNA will replace or alter cells and reverse the aging process is

completely unsubstantiated. In addition, RX for Aging has no

more curative properties than any moisturizer. The RNA con-

tained in the cream cannot be absorbed through the skin.

Although the doctors testified that there 1s some theoretical

evidence that the ingestion of certain vitamins and minerals,

when deficient in the body, can alleviate certain conditions,

deficiencies are rare in the population at large and the dosage

contained in Athena’s products would not be sufficient in any

event to correct a deficiency. For example, zinc is a mineral that

has been shown to be important in the health and functioning of

the sexual organs. The doctors stated, however, that zinc has

never been shown to be a sexual stimulant, as Athena asserts in

its advertisement for Euzinc-D. Further, azinc supplement could

have a possible effect on impotency only if the person suffering

from that malady was deficient in zinc, the deficiency was the

cause of the impotency, and the dosage was adequate. Similarly,

the claims made for Ex-Sel are also misleading. There is some

B-11

theoretical evidence that selenium, the primary ingredient in Ex-

Sel, may act as an oxidant, but absolutely no evidence supporting

the claims made by defendant that Ex-Sel tablets will prevent

heart disease or sterility. In addition, too much selenium in the

system may have toxic effects. Plaintiff’s witnesses also testified

that Athena Nutrition for Women contains vitamins B,, Bs, B,2,

folic acid, and iron. Deficiencies of these vitamins are rare causes

of hormone imbalance or hair loss, and the dosage of iron in the

product will have little effect on any iron deficiency.

With respect to L-glutamine, the advertised ingredient in Food

for Thought, the doctors testified that there is simply no evidence

to support any claim that it can stimulate the brain, prevent

forgetfulness, or increase intelligence. As for Natural Calm,

there have been some experiments with L-tryptophan and

dolomite as sleep aids, but the dosages that have been shown to

cause any effect whatsoever are much larger than those con-

tained in defendant’s product, and there is no substantiation for

the claim that this product can cure insomnia. The chromium

and manganese contained in Chromill-GTF may affect glucose

tolerance, but will neither prevent nor affect the disease of

diabetes, or help the user ‘‘recapture the vitality of his youth.’’

Vitamin E, the primary ingredient of the product Meta-E, is

apparently currently a controversial vitamin. There is some

theoretical evidence that vitamin E may act in the body to help

scavenge for free radicals. There is absolutely no scientific

evidence, however, to support the claims made in defendant’s

advertisements that Meta-E will, among other things, improve

hormone production or protect the skin from environmental

pollution. The doctors testified that RNA, Meta-E, Ex-Sel, and

Chromill-GTF in combination, as in the Athena Stay Young

Program, would have no different effect when taken together

than when taken individually.

**Cellulite’’ is the popular term for subcutaneous fat that often

forms in lumpy configurations, especially on women. Plaintiff’s

experts testified that cellulite can be removed only in the same

manner as any body fat—through weight reduction and exercise.

Cellulite TR3 or Cellulite P.M. will neither rid the body of sub-

cutaneous fat deposits nor prevent their accumulation. There is

some disputed evidence that ‘‘PPA’’, the active ingredient in In-

Trim, may be a temporary appetite suppressant. Because

B-12

tolerance io the drug develops rapidly, its effects will not,

however, ‘‘last throughout your diet.’’ It is also not ‘‘safe for all

dieters’’ as stated in the advertisement. The label on the product

itself in fact states that persons with high blood pressure should

not use In-Trim.

Finally, plaintiff’s experts testified that the claims made for

Power Tabs are also false and misleading. Energy derives from

burning calories. Each ‘‘power tab’’ contains only one calorie of

fructose. Deficiencies of the remaining ingredients—B-vitamins,

magnesium, iron—may cause listlessness in some cases, but

**Power Tabs’’ will not act as a quick energy booster.

Unfortunately, the nature of plaintiff’s claims and the statute

at issue here cast the district judge in the role of a medical expert

who must evaluate scientific evidence and weigh the credibility of

experts in the health field. However, the task for the court was

alleviated to a great degree in this case by the lack of dispute be-

tween plaintiff’s and defendant’s expert witnesses on the critical

scientific issues in this case.

First, defendant presented no controverting evidence at all as

to some of the products, and very little as to other products.

Defendant offered no evidence, scientific or otherwise, that

Cellulite P.M. or Cellulite TR3 can, without accompanying exer-

cise or diet, cause weight loss. Although the products contain an

ingredient that increases blood circulation, there was no evidence

that Cellulite P.M. or Cellulite TR3 inhibit the formation of

cellulite or accelerate the burning of foods, as advertised by

defendant. Although the doctors who testified for defendant had

different opinions as to whether ‘‘cellulite’’ is simply fatiy tissue,

or whether it is composed of both adipose tissue and trapped

waste materials, defendant’s witnesses admitted that if the dila-

tion agents in defendant’s cellulite products were to have any

effect in ‘flushing out hard-to-reach’’ fatty deposits under the

skin, there must be a deficiency in the body to begin with. See,

¢.g., Affidavit of William H. Saunders, M.D. at (19.

As for the product In-Trim, containing the element ‘“‘PPA’”’

which has been touted as an appetite depressant, defendant

presented no proof to refute plaintiff’s evidence that ‘‘PPA”’ can

nave adverse effects on persons suffering from hypertension. In

fact, defendant’s instructions accompanying the product state

that it should not be taken by persons with high blood pressure.

B-13

Thus, defendant’s own instructions controvert the truth of

defendant’s claim that In-Trim is ‘‘safe for all dieters.”’

Similarly, defendant failed to produce any evidence to refute

plaintiff’s expert’s opinions that yeast RNA taken orally in the

Athena product RNA or exogenously in the cream RX for

Aging, can replace or duplicate human body cells and therefore

retard the aging process, fade age spots on the skin, eliminate

wrinkles, or ‘‘alter’”’ the ‘‘genetic make-up”’ of the body’s cells.

The gist of defendant’s evidence, that RNA is a nucleic acid

essential to the body’s survival, was consistent with plaintiff’s

evidence. Defendant presented no evidence to support its anti-

aging claims.

The remaining products caused greater controversy among the

experts, but only on peripheral issues. The dispute centered on

the possible and potential beneficial effects of vitamin and

mineral supplementation on general health. The testimony

revealed that defendant’s support for its claims of the

therapeutic effects of its products rests on either currently

untested theories relating to certain vitamins or minerals, or on

theories extrapolated from currently accepted knowledge as to

the role of vitamins and minerals in human health. All the

experts agreed, for example, that the minerals and vitamins con-

tained in Food for Thought, Youth Factor, Athena Stay Young

Program, Ex-Sel, Meta-E, Power Tabs, Euzinc-D, Athena

Nutrition for Women, Chromill-GTF, and Natural Calm are

important, and in some instances essential, to the proper func-

tioning of the body. Adequate amounts of the principal elements

contained in these products is important to optimal health. But

not a single witness testifying for defendant by affidavit or at the

hearing stated that in the absence of a deficiency would any of

defendant’s products have any effect on the user. Defendant’s

chief medical witness, Dr. Saunders, in fact admitted on the

stand that even in cases of deficiency, defendant’s products only

have a potential of improving any of the particular symptoms

that products are advertised to treat.

The issue most contested by the experts was whether there is a

prevalence of vitamin and mineral deficiencies in the population

at large. Plaintiff’s witness asserted that due to the largely ade-

quate diet and the ability of the body to store or to make a its

own many essential elements, deficiencies are uncommon.

B-14

Defendant’s witness testified, on the other hand, that deficien-

cies are ubiquitous in the general population, whether

manifested in a clinical or discernable state, or merely in a

subclinical or incipient state.

The prevalence or absence of vitamin and mineral deficiencies

in our society, however, is not dispositive of the issue before this

court of whether there is probable cause to believe that the adver-

tising claims made by defendant for its products are false and

misleading. Defendant’s claims of the therapeutic effects of its

products are phrased in unconditional and inflated terms, while

the effects of the products are at best, and according to the

testimony of defendant’s own experts, dependent on whether

there is a deficiency in the user and whether the deficiency is the

source of the symptoms complained of. The fact that the pro-

ducts may have incidental beneficial or favorable effects in some

instances including a possible placebo effect in some consumers,

does not vitiate the falseness of the claims as stated in the adver-

tising.? A glimmer of truth is not sufficient to refute the strong

scientific evidence of falsity presented by plaintiff.

The court finds the defendant’s advertising scheme is

reasonably calculated to deceive persons of ordinary prudence

and intelligence, and that there is probable cause to believe that

the advertising for all fifteen Athena products named in the

administrative complaints is deceptive and misleading. The in-

juctive relief sought by the USPS is therefore granted.

IV. Relief

Defendant argues vigorously against the scope of the relief re-

quested by the USPS in this action. First, defendant argues that

an order detaining Athena’s mail will impose an undue hardship

on Athena, resulting in a loss of business and customers, and

possibly requiring a lay-off of employees. Second, Athena con-

tends that it would be impossible to separate the mail that would

be subject to the court’s detention order from orders for other

*Defendant testified to the large numbers of repeat orders Athena receives for

its products, offered into evidence several letters from satisfied customers, and

stated that Athena Products, Ltd. has only received three complaints since it

opened for business three to four years ago. In addition, Athena has an un-

conditional money-back guarantee on all its products.

B-15

Athena products. In addition, it would be difficult to discern

which orders were directly solicited by defendant’s advertising

and which are re-orders of products. Third, because the USPS

seeks to enjoin defendant from opening new postal boxes, the re-

quested relief sweeps too broadly and would prohibit defendant

from modifying its advertising for the products and seeking new

orders at new addresses.

This court recognizes the temporary hardship and potential

adverse effect on defendant’s business that a mail detention

order may cause. Nevertheless, in view of the showing made by

plaintiff of the probable false and misleading nature of defen-

dant’s advertising, the issuance of a preliminary injunction is, we

believe, proper in this case. There are a large number of con-

sumers who may be affected by defendant’s allegedly deceptive

advertisements.

We are also aware, however, that an extended period of time

between the commencement of the detention of defendani’s mail

and a final ruling on the administrative complaints in this case

may work a disproportionate hardship on defendant. Consider-

ing that the government does not contend that defendant’s pro-

ducts, except in a few rare instances, are on the whole harmful to

the public, we believe the defendant is entitled to a speedy resolu-

tion of this matter by the USPS. The court will therefore limit the

preliminary injunction detaining defendant’s mail to a period

not to exceed 120 days.

Athena’s argument that it is impossible to separate the various

orders for different products from each other, or to separate new

orders from re-orders is neither indicative of the overbreadth of

the proposed injunction, nor is it supported by the evidence.

Defendant’s vice president in charge of marketing testified that

Athena frequently uses color and other types of coding on

envelopes and order forms to differentiate between orders for

different products and between initial and re-orders. Athena also

has directed certain mail solicitations to specific post office box

address as a marketing research device. Defendant will be per-

mitted to examine its mail to separate out items not connected

with this action. To the extent that there is unavoidable overlap,

however, in that a customer may write one check for several pro-

ducts not all of which are the subject of this action, defendant

must simply bear the loss. The potential for overlapping orders

B-16

will not defeat the injunction in this case. In addition, we are not

convinced that a re-order for one of the fifteen enumerated pro-

ducts is substantively different from an initial order for the pro-

duct solicited through defendant’s advertising. Plaintiff may

detain all the mail relating to orders for the fifteen enumerated

Athena products.

We also reject defendant’s argument that an injunction

appropriately tempered to maintain the status quo between

defendant and the public until completion of the administrative

proceedings must exclude from its reach postal addresses that

defendant may choose to open in the future. The statute is

designed to protect the unwary pending an administrative deter-

mination of the merits of plainfiff’s complaint. Permitting

defendant to open new post office boxes or other addresses

would defeat that purpose.

In sum, plainiff may have the injunctive relief it requests,

limited only by the temporal restrictions stated above. Counsel

for plaintiff shall prepare an appropriate order for the court’s

approval.

Accordingly, plaintiff’s application for a preliminary injunc-

tion is GRANTED. Plaintiff shall immediately prepare an

appropriate order pursuant to the terms of this order.

IT IS SO ORDERED, this 27th day of March, 1981.

RICHARD C. FREEMAN

UNITED STATES DISTR!I-T JUDGE

B-17

APPENDIX C

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

UNIT B

No. 81-7303

UNITED STATES POSTAL SERVICE

Plaintiff-Appellee,

versus

ATHENA PRODUCTS, LTD.,

Defendant-Appellant.

Appeal from the United States District Court for the

Northern District of Georgia

ON PETITION FOR REHEARING

AND PETITION FOR REHEARING EN BANC

(Opinion August 27, 1981, 5 Cir., 198 , F.2d ).

(OCT 1981)

Before HILL and VANCE, Circuit Judges, and LYNNE*,

District Judge.

PER CURIAM:

( X_ ) The Petition for Rehearing is DENIED and no member

of this panel nor Judge of this Adminstrative Unit in regular ac-

tive service having requested that the Court be polled on rehear-

ing en bane (Rule 35, Federal Rules of Appellate Procedure;

Locai Fifth Circuit Rule 16; Fifth Circuit Judicial Council

Resolution of January 14, 1981), the suggestion for Rehearing

En Banc is DENIED.

( ) The Petition for Rehearing is DENIED and the judges in

regular active service of this Adminstrative Unit having been

polled at the request of one of said judges and a majority of said

judges not having voted in favor of it (Rule 35, Federal Rules of

Appellate Procedure; Local Fifth Circuit Rule 16; Fifth Circuit

Judicial Council Resolution of January 14, 1981), the sugges-

tion for Rehearing En Banc is also DENIED.

( ) A member of this Administrative Unit in active service

having requested a poll on the reconsideration in this cause en

banc, and a majority of the judges in active service of said unit

not having voted in favor of it, rehearing en banc is DENIED.

ENTERED FOR THE COURT:

United States Circuit Judge

*District Judge of the Northern District of Alabama, sitting by

designation.

CLERK’S NOTE:

SEE RULE 41 FRAP AND LOCAL

RULE 17 FOR STAY OF THE

MANDATE

C-2

APPENDIX D

§ 3005. False representations; lotteries

(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 represen-

tations, including the mailing of matter which is nonmailable

under section 3001(d) of this title, or is engaged in conducting a

lottery, gift enterprise, or scheme for the distribution of money

or of real or personal property, by lottery, chance, or drawing of

any kind, 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

violation of this section, if the person, or his representative,

is first notified and given reasonable opportunity to be pres-

ent 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 re-

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

For purposes of the preceding sentence, the mailing of matter

which is nonmailable under such section 3001(d) by any person

shall constitute prima facie evidence that such person is engaged

in conducting a scheme or device for obtaining money or prop-

erty through the mail by false representations.

(b) The public advertisement by a person engaged in ac-

tivities covered by subsection (a) of this section, that remittances

may be made by mail to a person named in the advertisement, is

prima facie evidence that the latter is the agent or representative

of the advertiser for the receipt of remittances on behalf of the

advertiser. The Postal Service may ascertain the existence of the

agency in any other legal way satisfactory to it.

D-1

(c)As used in this section and section 3006 of this title, the term

‘*representative’’ includes an agent or representative acting as an

individual or as a firm, bank, corporation, or association of any

kind.

d) Nothing in this section shall prohibit the mailing of (1) a

newspaper of general circulation containing advertisements, lists

of prizes, or information concerning a lottery conducted by a

State acting under authority of State law, published in that State,

or in an adjacent State which conducts such a lottery, or (2)

tickets or other materials concerning such a lottery within that

State to addresses within that State. For the purposes of this

subsection, ‘*State’’ means a State of the United States, the

District of Columbia, the Commonwealth of Puerto Rico, and

any territory or possession of the United States.

Pub.L. 91-375, Aug. 12, 1970, 84 Stat. 747; Fub.L. 93-583, § 4,

Jan. 2, 1975, 88 Stat. 1916; Pub.L. 94-525, § 2, Oct. 17, 1976, 90

Stat. 2478; Pub.L. 95-360, Sept. 9, 1978, 92 Stat. 594.

D-2

uoIISodd¢

Gfice- Supreme Court, U.S.

FILED

MAR 10 1962

ALEXANDER L. STEVAS,

CLERK

No. 81-1254

Inu the Supreme Court of the United States

OcTOBER TERM, 1981

ATHENA Propucts, LTD., PETITIONER

Vv.

UNITED STATES POSTAL SERVICE

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT

MEMORANDUM FOR THE RESPONDENT IN OPPOSITION

Rex E. Lee

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

TABLE OF AUTHORITIES

Page

Cases:

Bates v. State Bar, 433 U.S. 350 .......05005- 4,5

Blount v. Rizzi, 400 U.S. 410 ......... eee eens 3

Central Hudson Gas & Electric Corp. v. Public

Service Commission, 447 U.S. 557 ......... 4.5

Donaldson v. Read Magazine, 333 U.S.

DE &h640606650500e08n4cnnscccuececeene 3,5

Friedman v. Rogers, 440 U.S. 1 .......e ce eeees 4

Giboney v. Empire Storage & Ice Co.,

PE ED Sbacconcccecagsccocnswececouns 5

Lynch v. Blount, 404 U.S. 1007,

SE Fee FP. BI. GED ccccccccccsccccccececs 3

Ohralik v. Ohio State Bar Association,

EE Sodeccntescccesnvecsncéssces 4.5

Original Cosmetics Products, Inc. v. Strachan,

459 F. Supp. 496, aff'd, 603 F. 2d 214,

onst. Gomes, 666 UB. GIS .ccccccccctscoseces 4

Outpost Development Corp. v. United States,

414 U.S. 1105, aff'g 369 F. Supp. 399 ......... 3

Public Clearing House v. Coyne,

DEERE acséueredesenetenceseneonceces 3

Village of Hoffman Estates v. Flipside, Hoffman

Estates, Inc., No. 80-1681 (Mar. 3, 1982) ...... 5

Virginia State Board of Pharmacy v. Virginia

Citizens Consumer Council, 425 U.S. 748 ... 4.5

Page

Constitution and statutes:

United States Constitution, First

TEE ccccnvcccccescceesesesesesoess 4

39 U.S.C. (& Supp. III) 3005 .......... 1,2, 3,4, 5

PP Es GEE beeeccesdccdosscoccencesueesss 3

SKY O0KFbSedecsiscecivcaee 1, 2,3,4,5

Inu the Supreme Court of the Hnited States

OcTOBER TERM, 1981

No. 81-1254

ATHENA PropuctTs, LTD., PETITIONER

Vv.

UNITED STATES POSTAL SERVICE

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT

MEMORANDUM FOR THE RESPONDENT IN OPPOSITION

Petitioner challenges the constitutionality of 39 U.S.C.

(& Supp. III) 3005 and 3007, which permit the United States

Postal Service to prevent the use of the mail for obtaining

money or property by means of false and misleading repre-

sentations. Under 39 U.S.C. (& Supp. II1) 3005, the Postal

Service may, after an administrative proceeding, return to

the sender, “appropriately marked as in violation of this

section,” mail and money addressed to “any person * * *

engaged in conducting a scheme or device for obtaining

money or property through the mail by means of false

representations * * *.” The orders issued by the Postal

Service under Section 3005 permit the delivery of mail

unrelated to the fraudulent scheme. Under 39 U.S.C. 3007,

the Postal Service may sue in a United States district court

and, upon a showing of probable cause, obtain a prelimi-

nary injunction detaining the mail of a person alleged to be

engaged ina fraudulent scheme, pending the conclusion of

the administrative proceeding under Section 3005. Section

3007 specifies that a district court “may provide in the order

that the detained mail be open to examination by the

defendant and such mail be delivered as is clearly not con-

nected with the alleged unlawful activity.”

1. Petitioner advertises and sells through the mail a

number of products that, it claims, will do such things as

“cause weight loss and figure modification,” “prolong

youth” by acting as “rejuvenating agents,” “ ‘help * * *

improve * * * sexual performance and confidence,’ * * *

‘improve your memory, thinking, and concentration’ and

‘measurably raise intelligence’ ” (Pet. App. B-1, B-9 to B-

10). The publication in which petitioner advertises these

products contains an order blank that is to be mailed, with

payment, to petitioner's address (id. at A-2).

In February 1981, the Postal Service initiated a Section

3005 administrative proceeding against petitioner, citing

its representations concerning | 5 of its products. The Postal

Service also filed suit in the United States District Court for

the Northern District of Georgia, seeking a preliminary

injunction under Section 3007 (Pet. App. A-2).

In the district court, the Postal Service presented testi-

mony from a doctor of pharmacology and a medical doctor,

both of whom “stated that there is no scientific evidence to

support the therapeutic claims made by” petitioner (Pet.

App. B-11). The Postal Service also presented supporting

affidavits (ibid.). Petitioner “presented no controverting

evidence at all as to some of the products, and very little as

to other products” (id. at B-13). The district court con-

cluded that petitioner’s advertising was “reasonably calcu-

lated to deceive persons of ordinary prudence and intelli-

gence” and that there was “probable cause to believe that

the advertising for all fifteen * * * products named in the

administrative complaints is deceptive and misleading” (id.

at B-15).

The district court accordingly entered an injunction per-

mitting the Postal Service to detain “all the mail relating to

orders for the fifteen enumerated * * * products” (Pet.

App. B-17). The court expressly gave petitioner the right to

review the mail and collect “any mail not related to the

alleged unlawful activity”; it rejected, as unsupported by

the evidence, petitioner's claim that it was impossible to

separate mail connected to the 15 items from other mail (id.

at B-3, B-16 to B-17). The district court did rule, however,

that petitioner “is entitled to a speedy resolution” of the

administrative proceeding, and it accordingly limited the

pre!minary injunction to 120 days (id. at B-16). The court

of appeals affirmed, rejecting petitioner’ constitutional

claims (id. at A-1 to A-10).!

2. The constitutionality of Sections 3005 and 3007 is well

established. In Donaldson v. Read Magazine, 333 U.S.

178, 189-191 (1948), and Public Clearing House v. Coyne,

194 U.S. 497, 505-516 (1904), the Court upheld this statu-

tory scheme against a constitutional challenge. Blount v.

Rizzi, 400 U.S. 410 (1971), invalidated both 39 U.S.C. 3006,

a statute similar to Section 3005 but directed to obscene

publications instead of fraudulent schemes, and the use of

Section 3007 in connection with proceedings under 39

U.S.C. 3006. But Blount v. Rizzi carefully distinguished

Section 3005. See 400 U.S. at 414-415 n.2. Subsequent to

Blount vy. Rizzi, the Court summarily rejected constitu-

tional challenges to Sections 3005 and 3007. Linch v.

Blount, 404 U.S. 1007 (1972), aff'g 330 F. Supp. 689 (S.D.

'The court of appeals stated (Pet. App. A-8):

Injunctions granted under section 3007 should * * * extend no

longer than necessary for a prompt administrative determination

on the merits conducted in the section 3005 proceeding. The

district court met this requirement, * * * carefully limiting the

preliminary injunction to a period not to exceed 120 days.

N.Y. 1971) (Section 3005); Outpost Development Corp. v.

United States, 414 U.S. 1105, aff’g 369 F. Supp. 399 (C.D.

Cal. 1973) (Section 3007).

Petitioner asserts (e.g., Pet. 16) that the Court should

reconsider these decisions because, after they were issued,

the Court extended constitutional protection to some forms

of commercial speech.” But, as the court of appeals recog-

nized (Pet. App. A-5 to A-7), this Court has made it clear

that deceptive commercial speech is not entitled to constitu-

tional protection. See, e.g., Central Hudson Gas & Electric

Corp. v. Public Service Commission, 447 U.S. 557, 563

(1980); Friedman v. Rogers, 440 U.S. 1, 9-i0 (1979);

Ohralik v. Ohio State Bar Association, 436 U.S. 447, 464-

465 (1978); Bates v. State Bar, 433 U.S. 350, 383 (1977);

Virginia State Board of Pharmacy v. Virginia Citizens

Consumer Council, 425 U.S. 748, 771-772 (1976).

The district court found that the 15 advertisements at

issue are deceptive; petitioner did not contest that finding in

the court of appeals (Pet. App. A-3 to A-4) and does not

appear to contest it now.} Indeed, it is questionable whether

petitioner's promotional scheme should even be classified

2In Original Cosmetics Products, Inc. v. Strachan, 459 F. Supp. 496

(S.D. N.Y. 1978), aff'd, 603 F. 2d 214 (2d Cir.), cert. denied, 444 U.S.

915 (1979), this Court declined to review a constitutional challenge to

Section 3005 even though it had previously held that the First Amend-

ment protects commercial speech.

‘Petitioner does appear to suggest (e.g., Pet. 17-19) that Sections 3005

and 3007 are constitutionally infirm because they may reach expression

that is merely misleading and not an outright falsehood. But the Court

has never held that commercial speech must be demonstrably false in

order to be regulated; it is enough that the speech is “more likely to

deceive the public than to inform it” (Central Hudson Gas & Electric

Corp. v. Public Service Commission, supra, 447 U.S. at 563) or that

“there is a significant possibility that" the regulated speech “will

* * * mislead the public” (Friedman vy. Rogers, supra, 440 U.S. at 13).

See also Ohralik vy. Ohio State Bar Association, supra.

as speech; by its terms Section 3005 applies to “scheme[s] or

device[s! for obtaining money or property through the mail

by means of false representations,” and “it has never been

deemed an abridgement of freedom of speech or press to

make a course of conduct illegal merely because the conduct

was in part initiated, evidenced, or carried out by means of

language” (Giboney v. Empire Storage & Ice Co., 336 U.S.

490, 502 (1949): see Ohralik v. Ohio State Bar Association,

supra, 436 U.S. at 456).

In any event, since this Court’s commercial speech deci-

sions foreclose the argument that petitioner's deceptive

promotions for the I5 items were constitutionally pro-

tected, petitioner’s challenge to Sections 3005 and 3007

riust rest on its assertion (e.g., Pet. 9-11, 17) that those

statutes will have an effect on some other party's protected

commercial speech—that is, that they are overbroad. But

not only are Sections 3005 and 3007 designed to sanction

only deceptive speech; in addition, “the overbreadth doc-

trine does not apply to commercial speech” (Village of

Hoffman Estates v. Flipside, Hoffman Estates, Inc., No.

80-1681 (Mar. 3, 1982), slip op. 7; see Central Hudson Gas

& Electric Corp. v. Public Service Commission, supra, 447

U.S. at 565 n.8). “Since the advertiser knows his product

and has a commercial interest in its dissemination, we have

little worry that regulation to assure truthfulness will dis-

courage protected speech.” Bates v. State Bar, supra, 433

U.S. at 383; see Virginia State Board of Pharmacy v.

Virginia Citizens Consumer Council, supra, 425 U.S. at

771-772 n.24, citing Donaldson v. Read Magazine, supra.

For these reasons, this Court's decisions extending consti-

tutional protection to commercial speech furnish no reason

to reconsider the constitutionality of Sections 3005 and

3007.

It is therefore respectfully submitted that the petition for

a writ of certiorari should be denied.

Rex E. Lee

Solicitor General

Marcu 1982

DOJ-1982-03

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.