Raladam Co. v. Federal Trade Commission

• Decision Date: 01 July 1930
• Docket Number: No. 5429.,5429.
• Citation: 42 F.2d 430
• Parties: RALADAM CO. v. FEDERAL TRADE COMMISSION.
• Court: U.S. Court of Appeals — Sixth Circuit

42 F.2d 430 (1930)

RALADAM CO. v. FEDERAL TRADE COMMISSION.

No. 5429.

Circuit Court of Appeals, Sixth Circuit.

July 1, 1930.

L. W. McCandless and R. T. Gust, both of Detroit, Mich. (Stevenson, Butzel, Eaman & Long, of Detroit, Mich., on the brief), for petitioner.

M. A. Morrison, of Washington, D. C. (Robt. E. Healy and Edw. J. Hornibrook, both of Washington, D. C., on the brief), for respondent.

Before DENISON and HICKS, Circuit Judges, and COCHRAN, District Judge.

DENISON, Circuit Judge.

The so-called patent medicine habit has a traditional hold upon the masses of the American people. The medical profession has always contended that auto-diagnosis, drug store purchases, and self-medication are dangerous to the public health, and ought to be suppressed or minimized. The evil, at least in some degree, is not to be denied; but how it should be stopped has been considered an insoluble problem. This record reveals the solution. The type of advertising which has long been customary for the commercial promotion of these remedies¹ is to be scrutinized and perhaps condemned by the Federal Trade Commission; and thereupon the appropriate United States Circuit Court of Appeals is to stop it by injunction. The proprietor of the particular remedy here involved challenges the power and right of the Commission in these respects, and brings this petition for review.

For many years, and particularly of recent years, vast numbers of persons have desired to reduce their weight. Whether there was accumulation of fatty tissue beyond the normal standard for that person, — a real obesity, — or whether there was a mere desire to be more slender, the tendency went to such an extent as to become a craze or a fad. Every one knew that a diminution of food intake — diet — or an increase of muscular effort — exercise — would tend to bring reduction. These things were prescribed and controlled by doctors and institutions, and were promoted by propaganda unmeasured. More than twenty years ago scientific research developed the theory that the consumption of fatty tissue which brought weight reduction was a process of oxidization — the excess could by analogy be considered as burned in the body tissue cycle. The theory was also developed that the normal secretion of the thyroid gland was an effective agent in bringing about or accelerating this oxidization. Still later, it was found that the medicinal use, by mouth or subcutaneously, of the substance of this same gland taken from food animals would supplement and so increase the effect of the human thyroid gland. Still later it was learned — or at least came to be and still is believed by the medical profession — that the rate of such tissue consumption in a particular patient can be measured by observing the amount of oxygen used by that patient in a given period of breathing. Experiments indicate the average or normal rate, appropriate to a particular age, height, etc., and this has been named the basic metabolic rate — for short, the doctors call it the B. M. R. The use of the devices which have been ingeniously contrived for measuring this oxygen consumption by the patient, they call the metabolism test. So much for background and scenery.

Some twenty years ago, and while the underlying theory of the thyroid gland action was known rather exclusively to men of science, and was not the subject of much popular knowledge, the predecessors of the Raladam Company, which was the respondent before the Federal Trade Commission, and is the petitioner in this review, devised what they called a remedy, or treatment, for obesity. The primary active agent was a preparation of the thyroid gland of animals, either in extract or desiccated form. The remedy contained also drugs, for their collateral effect, and other substances for body, flavor, etc. They named it Marmola. Their advertising and other methods of promotion progressively varied, but, when this proceeding was commenced, petitioner and they had been, for some years, furnishing the article only for ultimate sale by the retail drug trade and not selling directly to the user. They were doing very extensive advertising, both in the so-called national magazines and periodicals and in the daily and weekly local newspapers. The result had been a very large and profitable business. Each package as sold contained a considerable number of these Marmola tablets, and upon the package and in the inclosed leaflet were directions and advice in regard to the use of the treatment. The specifically important points in this advertising and these directions will be developed later.

The Commission filed this complaint. It alleged that the Raladam Company was using unfair methods of competition, in that its advertising contained a considerable number of false statements and claims. The Raladam Company answered. Testimony was taken before a trial examiner. In accordance with the rules of the Commission, he made his report, stating conclusions of fact and of law like a master in chancery; and, also pursuant to the rules, each party filed exceptions, and the exceptions were argued before the Commission. Without reference to, or mention of, the examiner's findings or the exceptions thereto, the Commission thereupon made its findings of fact, to the effect that the advertising claims were false and injurious to the public in certain particulars, and thereupon made its order that the Raladam Company should desist and refrain in the particulars specified. Within due time the respondent before the Commission brought this petition for review, alleging that the Commission's findings were not supported by the evidence, and that it lacked jurisdiction for the reasons and in the particulars specified. Raladam prayed that the order to desist and refrain be vacated. The Commission filed an answer, taking issue on the petition. It then proceeded, by analogy to equity practice, to add a cross-complaint, and pray that the court enjoin the petitioner from such advertising and other conduct as the Commission had forbidden.

The petitioner has asked that this quasi cross-bill be dismissed because not authorized by any rule or by general equity practice. This motion was continued until final hearing; and we now find it unnecessary to make any ruling thereon but, for present purposes, we assume that it was rightly filed.

The Commission's order to desist and refrain contains six specific prohibitions against advertising. Taken together, they reduce to two; they forbid the representation that Marmola is a scientific remedy for obesity; and thereupon they forbid advertising Marmola as a remedy for obesity unless the statement is added that it is not safe to be taken except under the supervision of a competent physician.

Before taking up the merits, we notice a matter of practice. The record showed that the proofs were taken before a trial examiner. He acted as a master or trial judge does. He ruled upon testimony, admitting or excluding; he frequently asked questions and directed and controlled counsel; he obviously felt that responsibility was upon him for the primary decisions which would stand unless overturned; then he made his findings, which he returned to the Commission with the evidence. In making up the record for this review, the Commission did not include these findings. Petitioner insists that, since the statute contemplates rules of practice by the Commission, and since the Commission has made rules assigning these duties and functions to the trial examiners, and since the Commission does not ordinarily itself see the witnesses, such findings became a proper part of the record for review. In reply, it is said that, since the Commission's findings of fact must stand, if supported by any evidence, the development of the matter before the Commission in this particular is immaterial. There are no Circuit Court of Appeals rules on this subject. Lacking them, it has been held that such findings need not be included; and we think that exclusion is supported by the better reason, and so we deny the motion to include; but we direct that, if the record is prepared for review by the Supreme Court, this motion to bring in the examiner's findings and the findings themselves be included in that record. In the margin we give part of these findings, both to illustrate the question of practice presented and because they make a clear summary of one view of the question in dispute.²

The first question raised is whether the advertising representations as to the scientific character and the safety of the remedy are statements of fact or are opinions. If the latter, it is conceded that the Commission could not transform them into matters of fact, and it is said that, as they were matters of opinion, and the opinions were held in good faith and were not unreasonable, the prohibitions in the Commission's order cannot be sustained. There is, in the petition filed by the Commission, no claim that the representations as to science and safety were fraudulent and not made in good faith, or were so obviously and clearly unsound that they could not plausibly be held by any intelligent person. There being no issue as to fraud or bad faith, no proofs were taken on either side, and such suggestions as are now made with that aspect must be disregarded.

Coming to this question, "fact or opinion": It is clear that the adjectives "scientific" and "safe" have ordinarily no absolute meaning. Nothing is always entirely safe, not even water to drink; nothing is so scientific to-day that it may not be discarded to-morrow; little is so chimerical to-day that it may not be scientifically accepted to-morrow. It was long a "scientific" fact that the world was flat; travel under the sea or in the air was long a scientific impossibility; Darius Green was the archetype of credulous ignorance. These merely illustrate that whether any particular plan or theory is scientific, in a fair sense of the word, is...