Removatron Intern. Corp. v. F.T.C.

Citation884 F.2d 1489
Decision Date04 August 1989
Docket NumberNo. 88-2245,88-2245
Parties1989-2 Trade Cases 68,749 REMOVATRON INTERNATIONAL CORPORATION and Frederick E. Goodman, Petitioners, v. FEDERAL TRADE COMMISSION, Respondent. . Heard
CourtUnited States Courts of Appeals. United States Court of Appeals (1st Circuit)

David M. Lipton, with whom David Hayes Erickson, Lipton & Pemstein and Judith Ashton, Davis, Malm and D'Agostine, Boston, Mass., were on brief for petitioners.

Melvin H. Orlans, Atty., F.T.C. with whom Kevin J. Arquit, Gen. Counsel, New York City, Jay C. Shaffer, Deputy Gen. Counsel, Cincinnati, Ohio, and Ernest J. Isenstadt, were on brief for respondent.

Before BOWNES, TORRUELLA and SELYA, Circuit Judges.

BOWNES, Circuit Judge.

Petitioners, Removatron International Corporation (Removatron) and Frederick E. Goodman, seek review of the Federal Trade Commission's 1 cease and desist order and decision which found the advertising of Removatron's epilator machine to be deceptive. The FTC defends the Commission's decision and order and requests that we issue an injunction pendente lite. For the reasons set forth below, we deny the petition for review and issue the injunction.

I. FACTS

Hirsutism is perceived as a problem by some people, particularly women. Many products are marketed to reduce or eliminate excessive hair. To remove hair permanently, the dermal papilla must be completely destroyed. The dermal papilla is a group of cells that forms a portion of the hair follicle. Most remedies offer only temporary relief. Electrolysis permanently removes hair but the process can be painful and may leave scars and pits in the skin.

Petitioners market a product that they claim can remove unwanted hair permanently without the side effects associated with electrolysis. Their product uses a pair of tweezers to remove the hair; while the tweezers grasp the hair but before it is removed, the machine emits radio frequency energy (RFE) that travels down the tweezers and along the hair. Petitioners claim that the RFE causes tissue damage and destruction of the dermal papilla by heating the tissue in much the same way a microwave heats food. Petitioners' product is approved by the Federal Communications Commission (FCC) to emit radio waves at a particular frequency.

Petitioners advertise their product mainly in the beauty industry trade magazines. Sales are made after a series of telephone calls, mailings of literature, and meetings. The machine costs about $4,000. During the sales process, the purchasers are told that the machine will not work for everyone and that permanent removal will only be obtained after several treatments. Women who wish to be treated by the machine are given much the same information in written or oral form by the machine owner or operator. The written information is provided by petitioners who also provide purchasers with advertisements to place in local print media. Treatments cost approximately $35 per hour.

Rather than rehash all the evidence anent petitioners' advertising, we present only a few typical samples of the types of claims made by petitioners. The petitioners stated that with Removatron treatments, hair removal can be "permanent" and unwanted hair will no longer be a The FTC filed a complaint against petitioners alleging that they did not have a reasonable basis for their advertising claims and thus, their ads were in violation of Sec. 5 of the Federal Trade Commission Act, 15 U.S.C. Sec. 45. 2 The complaint alleged that petitioners did not have a reasonable basis for their claims. It did not allege that petitioners had made "establishment" claims, which would require scientific evidence in support of the claims made. 3

                problem;  the ads also stated the machine is "effective" and an "alternative to electrolysis."    The advertising also included statements that the machine has been "clinically tested and endorsed" and "clinically tested and shown superior."    The ads also claimed that the FCC approved petitioners' product
                

After a lengthy trial, the administrative law judge (ALJ) agreed with the FTC and issued a cease and desist order. The ALJ found that the petitioners made both express and implied claims that their machine could remove hair permanently and that any disclaimers were ineffective and ambiguous. He also found that these claims were establishment claims, i.e. they purported to be supported by scientific evidence. He further found that the ads expressly claimed FCC approval and that these claims implied government approval of the entire product, not just the approval to emit radio waves at a certain frequency. 4

The ALJ then turned to the question of whether the petitioners had a reasonable basis for their claims. After an exhaustive discussion of hair growth and biology, he determined that, because the ads claimed scientific support for the claims made, two well-controlled scientific studies 5 were needed to show a reasonable basis for those claims. See Thompson Medical Co., Inc. v. FTC, 791 F.2d 189, 194-96 (D.C.Cir.1986), cert. denied, 479 U.S. 1086, 107 S.Ct. 1289, 94 L.Ed.2d 146 (1987). The ALJ analyzed the voluminous experimental, theoretical, and testimonial evidence, as well as the evidence relating to comparable products, presented by petitioners and found all of it lacking when compared to the rigors of well-controlled studies. The ALJ, therefore, held that petitioners had violated 15 U.S.C. Sec. 45. The ALJ found that petitioners' claims caused substantial financial and emotional consumer injury. Based on these findings and holdings, he entered an order, which in pertinent part required the petitioners: (1) to cease and desist from advertising their machine as a method of permanent hair removal unless they first possessed two well-controlled scientific studies supporting those claims; (2) to include The Commission adopted most of the ALJ's findings and conclusions and affirmed the order in large part. The Commission rejected petitioners' arguments that the ALJ erred in various evidentiary rulings. The Commission rejected the ALJ's finding that petitioners' claims had caused emotional injury to any purchaser or woman who had used the machine. The Commission agreed with the ALJ's findings that petitioners had made "establishment" claims and thus needed to have scientific support for those claims. It found, however, that petitioners needed one well-controlled scientific study in order to have a reasonable basis for their claims, not two, as the ALJ had found. In a footnote, the Commission analyzed the factors for non-establishment claims, see In re Pfizer, Inc., 81 F.T.C. 23 (1972), and held that, even when viewed in this light, petitioners needed at least one study in order to have a reasonable basis for their claims. 6 Because petitioners lacked any such studies, the Commission affirmed the finding of a violation of 15 U.S.C. Sec. 45. By an evenly divided vote, the Commission modified the order to require that petitioners cease their permanency claims until they possessed one well-controlled scientific study supporting that claim; two Commissioners would have upheld the ALJ's determination that two such studies were needed. The Commission also modified the ALJ's order by deleting the requirement of providing future purchasers with a copy of the order because it felt the rest of the order was comprehensive enough to make this requirement unnecessary; one Commissioner would have retained this provision but only for five years.

in future advertising claiming that their product will remove hair, a disclaimer that the machine can only remove hair temporarily; (3) to send each purchaser a copy of the order; and (4) to provide future purchasers with a copy of the order. Petitioners appealed to the Commission.

Petitioners filed a petition for review in this court. The issues are: (1) whether there was a violation of petitioners' right to due process; (2) various evidentiary rulings by the ALJ; (3) the sufficiency of the evidence; (4) the requirement that petitioners possess one well-controlled study before making permanency claims; and (5) the requirement that petitioners insert specific language in future ads. We address each issue seriatim, stating, as necessary, additional facts.

II. DUE PROCESS

Petitioners argue that their fifth amendment right to due process was violated because the ALJ and Commission found them liable on a theory not alleged by the FTC in its complaint. They contend that the complaint alleges only that they made non-establishment claims but that the ALJ and Commission analyzed their substantiation in light of an establishment theory. Because they were not on notice as to the theory of liability, they say they were not given a full and fair opportunity to defend themselves. We need not decide whether the FTC's complaint was insufficient to provide petitioners with sufficient notice because we reject this contention as not being properly preserved for review.

The general rule is that " '[i]n the absence of extraordinary circumstances, none of which are apparent here, we have regularly declined to consider points which were not seasonably advanced below.' Clauson v. Smith, 823 F.2d 660, 666 (1st Cir.1987) (collecting cases)." United States v. Lott, 870 F.2d 778, 781 (1st Cir.1989). This general rule applies with equal force to arguments not presented to the Commission in the first instance. See, e.g., Litton Indus., Inc. v. FTC, 676 F.2d 364, 369 (9th Cir.1982); Cotherman v. FTC, 417 F.2d 587, 590-94 (5th Cir.1969) (waiver of subject matter jurisdiction by failure to appeal that issue to the Commission). In United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37, 73 S.Ct. 67, 69, 97 L.Ed. 54 (1952), the Court said:

Simple fairness to those who are engaged in the tasks of administration, and to the litigants, requires as a general In the present case, the petitioners knew, at the latest when the ALJ issued his opinion and order, that an establishment...

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