Dolcin Corp. v. Federal Trade Commission

• Decision Date: 01 July 1954
• Docket Number: No. 11700.,11700.
• Citation: 219 F.2d 742
• Parties: DOLCIN CORP. et al. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — District of Columbia Circuit

219 F.2d 742 (1954)

DOLCIN CORP. et al. v. FEDERAL TRADE COMMISSION.

No. 11700.

United States Court of Appeals District of Columbia Circuit.

Argued April 13, 1954.

Decided July 1, 1954.

On Petition for Rehearing for Modification February 3, 1955.

Writ of Certiorari Denied April 4, 1955.

COPYRIGHT MATERIAL OMITTED

Mr. Michael F. Markel, Washington, D. C., with whom Mr. Wayne K. Hill, Washington, D. C., was on the brief, for petitioners.

Mr. John W. Carter, Atty., Federal Trade Commission, of the bar of the Supreme Court of Virginia, Danville, Va., pro hac vice, by special leave of Court, with whom Messrs. Robert B. Dawkins, Asst. Gen. Counsel, Federal Trade Commission, and Donovan Divet, Sp. Atty., Federal Trade Commission, were on the brief, for respondent.

Before BAZELON, FAHY and WASHINGTON, Circuit Judges.

On Petition for Rehearing in Banc, or, in the Alternative, for Modification February 3, 1955.

Writ of Certiorari Denied April 4, 1955. See 75 S.Ct. 571.

WASHINGTON, Circuit Judge.

This is a review of a cease and desist order of the Federal Trade Commission. Petitioners, the Dolcin Corporation and certain of its officers, are engaged in the manufacture of a drug — "Dolcin" — designed primarily to relieve the symptoms of arthritis and rheumatism. Each "Dolcin" tablet contains 2.8 grains of calcium succinate and 3.7 grains of acetylsalicylic acid (aspirin). Petitioners have repeatedly made far-reaching claims as to the product in their advertisements. The Federal Trade Commission, as a result, issued a complaint in August of 1949. After extensive hearings the trial examiner found that petitioners' advertising representations were in large part incorrect. The Commission affirmed the trial examiner's findings and on the basis of them issued a cease and desist order. In essence this order forbids petitioners from representing that Dolcin (1) is inexpensive; (2) may safely be taken over prolonged periods of time; (3) may safely be taken by persons who are adversely affected by aspirin; (4) will have any effect upon arthritic or rheumatic conditions beyond affording temporary relief of minor aches, pains or fever.¹

I.

Petitioners attack the Commission's order on several grounds. The first of these is that they were denied a fair hearing, in that Dolcin was made the subject of a test case to govern the status of all distributors of similar drugs; that the Commission denied petitioners the privilege of revising their advertising by stipulation; and that on the basis of the evidence taken in petitioners' case the Commission entered a cease and desist order against another distributor before it had decided the instant case, thus prejudging the matters in controversy.

The record before us does not establish the claimed unfairness. There is no showing that prior to the issuance of the Commission's complaint the petitioners had purged their advertising of the criticized claims; on the contrary, petitioners contest to this day the restrictions which the Commission then and now seeks to impose. And in any event abandonment of challenged practices does not automatically bar the issuance of a complaint. Eugene Dietzgen Co. v. Federal Trade Commission, 7 Cir., 142 F.2d 321, cert. denied, 1944, 323 U.S. 730, 65 S.Ct. 66, 89 L.Ed. 586. The record does show that another case involving "Sural," a similar drug put out by the Norlon Corporation, was the subject of a stipulation between the latter company and the Commission, whereby the medical evidence in the instant case would form part of the record in that case.² After the hearing in the present case was completed, petitioners asked for oral argument. The Norlon Company did not. The same trial examiner sat in both cases. He issued an Initial Decision in Norlon in January 1952 and a similar Initial Decision in Dolcin in the following month. In May 1952 the Commission issued a final order in Norlon; in June it heard argument in Dolcin, and issued its final order against these petitioners in December. The orders in the two cases were similar.

It may be that petitioners were in some degree prejudiced by the course the Commission took: their oral argument was delivered under the handicap of a fresh precedent rendered on the same medical evidence. But administrative agencies are under congressional mandate to "proceed with reasonable dispatch to conclude any matter presented,"³ and on the facts before us we see no abuse of discretion on the Commission's part in deciding Norlon as soon as it was ready for decision. Petitioners made no timely motion to have the decision in Norlon postponed until after the argument in Dolcin, nor did they move for any definite form of relief after Norlon came down. The occurrences here do not establish bias or disqualification on the part of the Commission; certainly nothing is shown sufficient to invalidate the hearing and the subsequent decision. Cf. Federal Trade Commission v. Cement Institute, 1948, 333 U.S. 683, 700, 68 S.Ct. 793, 92 L.Ed. 1009; United States v. Morgan, 1941, 313 U.S. 409, 420-421, 61 S.Ct. 999, 85 L.Ed. 1429.

II.

Petitioners also complain of errors by the trial examiner in the conduct of the hearing. One grievance is that they attempted to cross-examine some of the Commission's expert medical witnesses concerning statements made by other experts writing in various medical publications. The trial examiner would not allow the questions. Implicit in his rulings was the theory that medical publications were hearsay which could be used upon cross-examination only if the witness had relied upon them in direct examination. Petitioners contend this was an erroneous restriction on the scope of cross-examination and that it warrants reversal. They rely primarily on Reilly v. Pinkus, 1949, 338 U.S. 269, 70 S.Ct. 110, 94 L.Ed. 63.

In that case the petitioner (Pinkus) had sent representations through the mail about "Dr. Phillips' Kelp-I-Dine Reducing Plan." The Postmaster General, after a hearing, found these representations to be fraudulent and issued an order restricting petitioner's use of the mails. At the hearing doctors had testified as experts for the Post Office Department as to the efficacy of Kelp-I-Dine. They based their opinions, at least in part, upon their reading of medical textbooks and publications. Petitioner sought to cross-examine these doctors concerning statements in other medical books. The questions were not allowed. The Supreme Court, as a result, held that the Postmaster General's order should not be enforced by the courts, saying:

"It certainly is illogical, if not actually unfair, to permit witnesses to give expert opinions based on book knowledge, and then deprive the party challenging such evidence of all opportunity to interrogate them about divergent opinions expressed in other reputable books." 338 U.S. at page 275, 70 S.Ct. at page 114.

Reilly v. Pinkus, we think, stands for the general proposition that an expert witness who bases an opinion to a significant degree upon his reading may be cross-examined as to that opinion by reference to other reputable works in his field.⁴ It is not necessary for the witness to have relied in his testimony upon the particular authority the cross-examiner seeks to use.⁵ And we do not think that the Court limited its ruling to cases involving fraud.⁶ The Reilly case also holds that the trial examiner has broad discretion to determine the extent of the cross-examination on written authorities.⁷ He probably has, in some cases, discretion to determine whether there should be any such cross-examination at all. But it is error to exclude such questions by blanket rule, without more.

The examiner thus erred in the instant case. The question remains whether reversal is warranted. In deciding Reilly v. Pinkus the Supreme Court could hardly have intended to bring about reversal of every administrative hearing in which the trial examiner improperly excluded some questions on cross-examination — or in which some other error was made as to the admission or exclusion of evidence. The Court said:

"The power to refuse enforcement of orders for error in regard to evidence should be sparingly exercised. A large amount of discretion in the conduct of a hearing is necessarily reposed in an administrative agency. And what we have said is not to be taken as removing this discretion or as a compulsory opening of the gates for floods of medical volumes, even where shown to be authoritative." 338 U.S. at page 276, 70 S.Ct. at page 114.

The decision of the Postmaster General was upset in that case with good reason. The works on which the cross-examiner relied apparently were directly relevant to the central issue of the case and were in direct conflict with the Post Office Department's position. As a result they were of great importance to the petitioner. Had the witness been confronted with them and had the conflict been demonstrated to the trier of fact there might well have been a different result. This is especially so as fraud — the good or bad faith of the petitioner — was at issue in the case. The question was not whether petitioner's representations were correct, but whether or not he reasonably considered them correct. See 338 U.S. at page 276, 70 S.Ct. 110. A single authority in agreement with petitioner might well be decisive on that issue — although it might be far from proving that the representations were correct. Moreover, on the basis of the hearings an order of extreme severity — restricting petitioner's use of the mails — was imposed. It was with these factors present that the Supreme Court allowed the order of the Postmaster General to be overturned. We think it did so because under the circumstances of the case the restriction of cross-examination denied the petitioner substantial justice.

That was not the case here. Fraud was not at issue. A cease and desist order of the Federal Trade Commission "does not approach the severity of a mail fraud order."...