Almay, Inc. v. Califano, 76-1718

• Decision Date: 10 February 1978
• Docket Number: No. 76-1718,76-1718
• Citation: 187 U.S.App.D.C. 19,569 F.2d 674
• Parties: ALMAY, INC., et al., Appellants, v. Joseph A. CALIFANO, Jr., Secretary Department of Health, Education and Welfare, et al.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 674

569 F.2d 674

187 U.S.App.D.C. 19

ALMAY, INC., et al., Appellants, v. Joseph A. CALIFANO, Jr., Secretary Department of Health Education and Welfare, et al.

No. 76-1718.

United States Court of Appeals, District of Columbia Circuit.

Argued June 9, 1977.

Decided Dec. 21, 1977.

As Amended Feb. 10, 1978.

Rehearing Denied Feb. 10, 1978.

William R. Pendergast, Washington, D. C., with whom Wayne H. Matelski, Washington, D. C., was on the brief, for appellants. Raymond D. McMurray, Washington, D. C., also entered an appearance for appellants.

Patricia J. Kenney, Atty., Consumer Affairs Section, Dept. of Justice, and Thomas Scarlett, Atty., Food & Drug Administration, Washington, D. C., with whom Earl J. Silbert, U. S. Atty., Richard A. Merrill, Chief Counsel, Food & Drug Administration, Charles R. McConachie, Acting Chief, Consumer Affairs Section, Dept. of Justice, and Margaret A. Cotter, Asst. Chief, Consumer Affairs Section, Dept. of Justice, Washington, D. C., were on the brief, for appellees.

Before ROBINSON and MacKINNON, Circuit Judges, and MARKEY, ^* Chief Judge, United States Court of Customs and Patent Appeals.

Opinion for the court filed by MARKEY, Chief Judge.

MARKEY, Chief Judge, United States Court of Customs and Patent Appeals:

Appeal from a judgment of the district court denying plaintiffs' motion for judgment that Regulation 700.100 of the Food and Drug Administration (FDA) is arbitrary and capricious and not in accordance with law and granting FDA's motion for summary judgment. We reverse.

BACKGROUND

On February 25, 1974, appellee Food and Drug Administration (FDA) in accordance with 21 U.S.C. §§ 321(m), 362(a), and 371(a), initiated informal rulemaking proceedings by publishing a proposed regulation governing hypoallergenic cosmetics, under which:

A cosmetic may be designated in its labeling by words that state or imply that the product or any ingredient thereof is "hypoallergenic" if it has been shown by scientific studies that the relative frequency of adverse reactions in human subjects from the test product is significantly less than the relative frequency of such reactions from each reference product(s). (39 F.R. 7291.) ¹

The lynch-pin of the regulation was its requirement for employment of "comparison testing," i. e., for testing the labeled product against "reference product(s)" defined in the regulation as "similar-use competitive products in the same cosmetic product category" and representing a market share of 10%. Adoption of the comparison testing method rested entirely on the Commissioner's adoption of a comparative definition: "the term 'hypoallergenic' means to the consumer that the product causes fewer adverse reactions than other, similar-type use products . . .," 39 F.R. 7288, and the feeling that, while use of "hypoallergenic" has expanded over the years, the difference between "hypoallergenic" cosmetics and those not so labeled has become less distinct. 39 F.R. 7288.

Included in the preamble were comments of the Cosmetic, Toiletry and Fragrance Association (CFTA), the Bureau of Consumer Protection of the Federal Trade Commission A product labeled hypoallergenic or one using terms having similar meaning is one designed, formulated, tested, manufactured, marketed and monitored for the purpose of minimizing:

(FTC), and appellant Almay Corporation (Almay). CFTA alleged that "there is no demonstrated need nor is it practicable for the minimizing of allergic reactions to be an overriding consideration in all aspects of production and marketing of every cosmetic product," and urged adoption of this definition of "hypoallergenic" and similar terms:

1. The incidence of allergic response in individuals with a history of allergic reactions.

2. The risk of allergic induction to the normal population. (39 F.R. 7290.)

Almay objected to the comparison testing method because the composition of the selected reference products could not be predicted. Urging adoption of the CFTA definition, Almay proposed an objective compliance test, under which a product would have to demonstrate a minimum irritancy.

The FTC letter questioned whether comparison testing might permit labeling now illegal in the eyes of FTC and made a recommendation:

As you know, FTC case law holds that an unqualified claim of superiority, such as "less allergenic," is likely to be understood by consumers as a comparison to "most" other products or to competitive products "generally," Liggett & Myers Tobacco Co., 55 F.T.C. 354 (1958). Yet the rule, as presently drafted, would permit an unqualified "less allergenic" claim to be made, based on a showing that the product is less allergenic than 10 percent or less of competing products. Such claims are thus potentially deceptive or misleading under section 5 and section 12 of the FTC Act. To avoid such potential deception, I believe that products making a hypoallergenic claim should be required to define, in labeling, their hypoallergenic claim by specifically stating that the product is "less likely to cause allergic reactions than some competing products." (39 F.R. 7291.)

Under 5 U.S.C. § 553(c), the Commissioner solicited the filing of comments with the FDA Hearing Clerk on or before April 26, 1974. The FDA itself filed items characterized as "supportive data and background information":

1. Letter of June 1, 1973 of the Committee on Cutaneous Health and Cosmetics of the American Medical Association,

2. List of complaints on hypoallergenic cosmetics received by the Food and Drug Administration during the period 1969 through 1973,

3. Summaries of complaints on hypoallergenic cosmetics received by the Food and Drug Administration during the year 1973,

4. Two letters on hypoallergenic cosmetics received from consumers by the Food and Drug Administration,

5. Two letters on hypoallergenic cosmetics received from industry by the Food and Drug Administration,

6. Final Report on A Study of Health Practices and Operations, contract no. FDA 66-193 (June 1972). ²

During the comment period, the FTC filed the results of a consumer survey on hypoallergenic cosmetics, and these comments thereon by the Director of FTC's Bureau of Consumer Protection:

. . . we are filing these additional comments based upon a recent survey, conducted in California for the Federal Trade Commission . . . in October and November 1973 . . . . I wish to emphasize that even the limited conclusions I draw . . . are those of the Bureau of Consumer Protection . . . .

The survey consisted of four questions developed by the staff of the Bureau. . . . The survey used a probability sample of California adults 18 or older. . . . (T)he FTC's questions were administered only to the 585 female adults in the sample, and to 150 teenagers.

The first question concerned consumer awareness of . . . "hypoallergenic." The second . . . asked the respondents to state . . . what they believed "hypoallergenic" means. The third . . . asked whether the use of the term was based on official government tests. Finally, . . . asked to select from four definitions the one they believed came closest to describing "hypoallergenic."

(T)he survey is obviously limited . . . in . . . population sample and the number of questions and . . . is silent in some important respects, not least . . . the absence of any breakdown . . . between users and non-users of hypoallergenics. Nevertheless, . . . it sheds some light on consumer understanding of . . . "hypoallergenic."

While no tabulation was made, . . . consumer definition of "hypoallergenic" (question 2) indicates that respondents used the words "allergy," "irritation" and "rash" almost equally. This . . . is consistent with the judgment . . . in the preamble that the consumer "lacks sufficient medical knowledge to distinguish between a reaction that results from allergenicity (sensitization), irritation, or some combination of these." 39 F.R. 7288.

More critically . . . the . . . results suggest . . . a good deal of misunderstanding and confusion . . . among many consumers about the meaning of hypoallergenic. . . . (W)hen . . . subjects were given a choice of definitions, only 57% of women and 45% of teenagers selected the "correct" definition "less likely to cause irritation than regular cosmetics." Twenty-three percent of the women and 22% of the teenagers chose "completely free of any ingredients causing skin irritation/allergy" an interpretation which would render a product misbranded if made by a company marketing cosmetics. . . . (A) still smaller portion . . . was able correctly to define "hypoallergenic" when given no assistance. . . . (O)nly 7.5% of women defined "hypoallergenic" in . . . relative terms as "less likely to cause" or "low incidence of" allergenic reactions. Sixty-five percent used such absolute terms as "doesn't cause allergic reactions," "not harmful to skin," "no harsh chemicals" or "safe for use." *

The results of our survey should be used with caution. It is plausible . . . that a higher proportion of accurate definitions . . . would be found in . . . population . . . solely of hypoallergenic users. Nevertheless . . . the survey raises questions as to the likelihood that consumers, without some further assistance, will properly understand what is meant by hypoallergenic. To this extent, at least, . . . our survey provides some additional support for requiring a label statement such as that recommended in my January 11 letter . . . "less likely to cause allergic reactions than some competing products."

Comments by cosmetics and related industries were (1) uniform in their criticism of the comparative definition and comparison test method, and (2) generally supportive of the CFTA definition and an objective test.

Almay, by letter of April 24, 1974, alleged that the proposed regulation was irrational and objectionable, citing five reasons: (1) the standard is constantly changing, (2) comparison testing would lead to unfortunate competitive practices, (3)...