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Pinkus v. Reilly.

decided: October 25, 1948.

PINKUS
v.
REILLY.



Author: Rodney

Before McLAUGHLIN and O'CONNELL, Circuit Judges, and RODNEY, District Judge.

RODNEY, District Judge.

This matter arises upon an appeal by Louis A. Reilly, United States Postmaster of the City of Newark, New Jersey, from a summary judgment in favor of the appellee, Joseph J. Pinkus, trading as American Health Aids Company and also as Energy Food Center.

Pinkus, on June 1, 1945, instituted suit in the court below against Reilly to enjoin the carrying out of a "fraud order" issued by the Postmaster General to Reilly forbidding the latter to deliver mail to or cash money orders drawn in favor of Pinkus of certain of his trade name companies, and the officers and agents thereof as such.

The "fraud order" was issued by the Postmaster General after an investigation of the appellee's business and upon the recommendation of the Solicitor of the Post Office Department who conducted a hearing in which both the Government and Pinkus participated. The Solicitor found from the hearing, as appears in his memorandum to the Postmaster General, that Pinkus was engaged in conducting a scheme for obtaining money through the mails by means of false and fraudulent pretenses, representations, and promises, in violation of the laws of the United States.*fn1 It was upon this ground that the Postmaster General issued his "fraud order" to Reilly on May 7, 1945.

On June 24, 1947 the court below denied a motion for summary judgment by Reilly and entered judgment for permanent injunction in favor of Pinkus upon his motion for summary judgment.*fn2 The court below had before it the complaint and answer and the exhibits thereto, which include a transcript of the hearings before the Solicitor, the Solicitor's memorandum to the Postmaster General, the Postmaster General's "fraud order" to Reilly, copies of the allegedly false advertisements, a copy of a suggested diet, and excepts from certain medical books. See Pinkus v. Reilly, D.C.N.J., 71 F.Supp. 993.

The court below properly based its decision upon the administrative record alone. See Jarvis v. Shackelton Inhaler Co., 6 Cir., 1943, 136 F.2d 116, 118, and the question could properly be disposed of upon a motion for summary judgment.*fn3

While one of the grounds for appeal was that the Postmaster General was an indispensable party and the proceeding could not be maintained in his absence, and while there had been a conflict between circuits upon this question,*fn4 since this appeal was taken the question has been resolved by the Supreme Court in Williams v. Fanning, 1947, 332 U.S. 490, 68 S. Ct. 188, where it is held that the Postmaster General is not an indispensable party. Counsel concede that no further discussion of this point is necessary.

Another point briefed by the plaintiff-appellee on appeal is that the two statutes involved violate various provisions of the Federal Constitution. Subsequent to the filing of the brief, however, this point has also been disposed of by the Supreme Court in Donaldson v. Read Magazine, Inc., 1948, 333 U.S. 178, 189-192, 68 S. Ct. 591, wherein the constitutionality of the two statutes is upheld. We therefore deem it unnecessary to consider this phase of the case since all of the plaintiff-appellee's arguments are answered by the Supreme Court in the cited case.

The two statutes involved*fn5 generally provide that the Postmaster General, upon evidence satisfactory to him that any person is conducting a scheme for obtaining money through the mails by means of false or fraudulent representations, may instruct postmasters to stamp any letters, including registered letters, or mail matter directed to any such person as "fraudulent" and to return all such mail matter to the postmaster at the office at which it was originally mailed and may forbid any postmaster from paying to any such person any postal money orders drawn to his order. The "fraud order" issued to Reilly against Pinkus in the instant case contained these instructions.

Subsequent to this appeal by Reilly the "fraud order" has been revoked by the Postmaster General insofar as it applies to the Energy Food Center, and its officers and agents as such. This revocation has the effect of making the "fraud order" applicable only to the American Health Aids Company, and its officers and agents as such, at Newark, New Jersey. Such a modification of a "fraud order" is within the scope of the power and duty of the Postmaster General. Donaldson v. Read Magazine, 1948, 333 U.S. 178, 184, 68 S. Ct. 591.

The plaintiff-appellee, Pinkus, trading as American Health Aids Company, has been engaged for a number of years in the business of selling and distributing through the mails and in his store at Newark, New Jersey, a formula known as "Dr. Phillips' Kelp-I-Dine Reducing Plan." This plan is represented generally as a method of reducing excess fat at the rate of 3 to 5 pounds a week by merely cutting down on fatty and starchy foods and taking one-half teaspoonful of "Kelp-I-Dine" daily with any meal, preferably breakfast. The plan has been advertised in newspapers, circulars and magazines and over radio broadcasting stations.

There was placed in evidence at the hearing before the Solicitor certain advertisements of the plan taken from various issues of newspapers and magazines of national circulation and from circulars which were sent through the mails. Radio scripts used to advertise the plan at one radio station were also before the Solicitor. The gist of these advertisements and scripts is that one can lose from 3 to 5 pounds a week without any exercise or reducing drugs and by simply following the "Kelp-I-Dine Reducing Plan." It is stated that one can eat as usual and not cut out fatty, starchy foods but merely cut down on them. The plan is said to be the safe, lazy way to reduce without starving or strain.Some of the advertisements allege that "doctors approve" of the plan, while others declare that "users say doctors approve."

The radio scripts contain statements that age makes no difference in the success of the plan, nor does any ailment ...


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