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STEIN'S, STEIN'S MFG. CO. v. PILLING

August 1, 1966

STEIN'S, Stein's Mfg. Co., and Lou Stein, P.C., Plaintiffs,
v.
Arlton PILLING, Postmaster Woodbury, New Jersey, Defendant



The opinion of the court was delivered by: COHEN

 Plaintiffs seek a preliminary and permanent injunction against the enforcement of a United States Post Office Department Order, intercepting mail of the plaintiffs for fraudulent violation of Title 39 U.S.C. § 4005.

 Jurisdiction is derived from 28 U.S.C. § 1339, and the scope of review of the final departmental decision and order, 5 U.S.C. §§ 1007, 1009, must be confined to a determination of whether there was substantial evidence in fact to support them. United States Health Club, Inc. v. Major, 182 F. Supp. 759 (D.C.N.J. 1960), reversed on other grounds, 292 F.2d 665 (3 Cir. 1961) cert. den. 368 U.S. 896, 82 S. Ct. 172, 7 L. Ed. 2d 92 (1961); Pinkus v. Reilly, 71 F. Supp. 993 (D.C.N.J. 1947), affirmed 170 F.2d 786 (3 Cir. 1948), affirmed Reilly v. Pinkus, 338 U.S. 269, 70 S. Ct. 110, 94 L. Ed. 63 (1949).

 Plaintiffs, Stein's, Stein's Mfg. Co., and Lou Stein, P.C., are all one and the same, being Louis Stein, a Physical Culturist, who owns and operates certain mail order businesses trading under those names. The plaintiffs shall be referred to in the singular. The complaint is that fraud order No. 66-51 issued February 14, 1966, by the Judicial Officer of the Postal Department, adopting the decision of the Hearing Examiner after plenary hearing, improperly denies him use of the United States Mails by intercepting his mail matter and postal money orders drawn to his order in connection with his businesses.

 The fraud order also directs the United States Postmaster at Woodbury, New Jersey, the named defendant, to hold all letters and other mail matter arriving at his office addressed to plaintiff, except that which is found to be unrelated to the enterprises in question; to stamp the word "fraudulent" on the mail so held; and then to return the stamped mail to the senders. The complaint attacks the fraud order as not being based upon any evidence of either fraud on the part of plaintiff or in connection with his use of advertising, nor on any evidence of intent to deceive the public.

 Both parties have properly cross-moved for judgment upon the record made at the administrative level. Pinkus v. Reilly, supra.

 An examination of the record discloses that the present proceedings were initiated by General Counsel's filing of a complaint alleging that plaintiff herein was engaged in a fraudulent scheme in violation of 39 U.S.C. § 4005, *fn1" in that he has been obtaining remittances of money through the use of the mails by means of false and fraudulent pretenses and representations in selling products called "Complemin", later renamed "Blood Building Pep Tablets", and "La Femme Skin Ointment". Testimony was taken before a Hearing Examiner who made findings of fact and conclusions of Law, on July 29, 1965. He concluded that the allegations against plaintiff's advertisements in connection with the sale of "Complemin" pills and Stein's "Strength and Vigor Methods", as a package to men over forty years of age, while false, did not violate the statute. This conclusion was reached because the only evidence before him was opinion testimony on each side, neither of which established a universal scientific belief regarding the challenged promotion, with the result that the evidence was equated and could not, therefore, support a finding of fraudulent intent. However, the challenged use of "Blood Building Pep Tablets" and "La Femme Ointment" could not accomplish the feats attributed to them by plaintiff; this, plaintiff knew, as the record testimony demonstrates. Yet he persisted in his commercial promotion of these products and made use of the mails. The Hearing Officer concluded that plaintiff's own proof manifested intentional deceit, and demonstrated violation of the statute.

 Review of the findings of fact and conclusions of law was sought before the Judicial Officer of the Postal Department. The final departmental decision, made by the Judicial Officer, was rendered February 14, 1966. It was in accord with the Hearing Examiner's, and in parts deemed to be presently pertinent, stated the following:

 
"Neither Dr. Lenhoff nor Dr. Beloff [respective experts of the parties] maintained that Complemin would activate any sex ability * * *. I sustain the Hearing Examiner in his interpretation of the ads in this respect. The representations held out for Complemin are false but from the facts adduced at the hearing the intent to defraud is not sustained. Complainant's Exhibit F (a copy of which is attached hereto) calls attention to Blood Building Pep Tablets. The ad goes on to say (referring to MEN - WOMEN in large letters) 'If you want a happy home life and need to feel younger and stronger in fulfilling your home obligation - send for your FREE SUPPLY today.' If a man responded to this ad he was sent the Blood Building Pep Tablets along with the instructions (the methods) in the use of cold water applications to the male genital organs, and the method used for mental concentration on sex. But if a woman responded to the ad she was sent only the Blood Building Pep Tablets. It was brought out in the testimony that Complemin and Blood Building Pep Tablets are one and the same thing. Counsel for Respondent maintains this ad does not refer to sex, but I believe that it does. Furthermore, I believe that the average person would so interpret it. Since both the doctor for the Complainant and the doctor for the Respondent testified that Complemin would not activate any sex ability and since Blood Building Pep Tablets are the same as Complemin the representations set out in Complainant's Exhibit F are fraudulent. With Mr. Stein's knowledge of Complemin which he received from Dr. Beloff he knew the ad on Blood Building Pep Tablets would not do what it says it will. There is a clear intent to defraud.
 
"Complainant's Exhibit D sets out the Respondent's ad inviting the attention of women. On the right side of the ad is a good-looking young woman with large breasts. The ad says:
 
WOMEN! YOU TOO CAN DEVELOP A MORE EXCITING, ALLURING BODY
 
FREE 30 DAY TRIAL
 
Bring out your hidden beauty * * * We'll send you (NO OBLIGATION) a 30 day supply of LA FEMME SKIN OINTMENT (Vitamin Fortified) and methods. See for yourself. Please enclose 25 cents for postage and handling. STEIN'S, Box 4-375, Woodbury, New Jersey.
 
"Dr. Kenneth D. Campbell, whose qualifications cannot be challenged, was called as the complainant's [Postal Department at the administrative hearing] witness. In answer to the questions asked about the instructions accompanying the product for the massage of the female breasts with the La Femme Skin Ointment with 15 strokes upwards on the underside of the breast and 15 strokes on the upperside of the breast and after the massaging to take 7 deep breaths, Dr. Campbell said it was dangerous to massage the female breast and that he never recommended it because the breast is the site of one of the two most frequently occurring cancers in the female - Tr. 209 - that it was ill advised medically to traumatize a pre-malignant or malignant lesion. Dr. Campbell referred to reports from literature in the various cancer institutes. He went on to say that 'You can say with a fair degree of medical certainty that the traumatization of a cancerous lesion in an animal will cause its spread; the same thing will ensue in a human being.' * * * Tr. ...

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