2921. Misbranding of Nue-Ovo.   U. S. v. 600 Units, etc. (and 3 other seizure
actions). Trial by jury. Verdict for Government. Decree of condem-
nation and destruction. Judgment affirmed on appeal to court-of appeals.
Certiorari denied by United States Supreme Court. (F. D. C. Nos.
14342,   16711,  20239,  20768.    Sample  Nos.  3830-F,  80924-F,  27846-H,
45063-H, 45068-H, 58379-H.)
LIBELS FILED : On or about November 8, 1944, August 6, 1945, and June 18 and
August 29,1946, "Western District of Missouri, Western District of Washington,
and Southern District of California.
ALLEGED SHIPMENT: The product was shipped by Research Laboratories, Inc.,
from Portland, Oreg., between the approximate dates of June 27, 1944, and
August 24, 1946, and quantities of printed matter were shipped by the above
firm, from Portland, Oreg., on or about April 16, 1945, and February 1 and
June 1946. Quantities of printed matter also were shipped by Nue-Ovo, Inc.,
from Chicago, 111., on or about July 19, 1943, and April 7 and August 8, 1944.
PRODUCT : 600 units, each containing 3 bottles; 71 packages, each containing 3
bottles; and 160 cases, each containing 18 bottles, of Nue-Ovo at Kansas City,
Mo., Seattle, Wash., and Los Angeles, Calif., together with copies of circulars
entitled "Information on Nue-Ovo and its Value in Arthritic and other Rheu-
matoid Symptoms" and "Read and see what Nue-Ovo has done for this man,"
copies of a circular letter headed "California Division Research Laboratories,
Inc." and beginning "We thank you for your inquiry regarding Nue-Ovo in the
treatment of Arthritic and Rheumatic symptoms, which was used successfully
by Mrs. Emma Ives," and a number of placards reading, in part, "Are you
suffering from arthritis or rheumatism?" Analysis disclosed that the product
contained water, sugars, sodium benzoate, and extracts of plant materials,
including a caffeine-bearing drug, such as kola nut, and licorice and cinnamon,
and a laxative drug, such as cascara sagrada, and that certain portions of
the product also contained sodium salicylate and a minute amount of vitamin
?See also Nos. 2913-2916. 2918-2920.
NATURE OF
 CHARGE: Misbranding, Section 502 (a), certain statements in the
circulars, circular letter, and placards were false and misleading. The nature
of the false and misleading statements is set forth in the opinion of the circuit
court of appeals, supra.
DISPOSITION : Research Laboratories, Inc., having appeared as claimant and
filed a motion for the removal of the libel proceedings in the Western District
of Missouri, an order was entered on March 1, 1945, by the court for that
district, directing that the proceedings be removed for trial to the District of
Oregon. Thereafter, a motion to vacate such order was filed on behalf of the
Government, on the grounds that the court was without authority to transfer
the case to the district in which the claimant had its home office.
On March 23, 1945, after consideration of the briefs of the parties, the fol-
lowing opinion was handed down:
REEVES, District Judge: "On the first day of March 1945 this court entered
an order removing and transferring the above entitled cause to the district
court of the United States sitting at Portland, Oregon, for trial.   This is the
place intervener's business is located.   The order was made pursuant to motion
filed by the intervenor for removal and transfer of the libel proceeding pursuant
to provisions of Section 334 (a), Title 21 U. S. C. A.   The language of the
motion conforms to the statutory requirements, as follows:
In any case where the number of libel for condemnation proceedings is limited * * *
the proceeding pending or instituted shall, on application of the claimant, seasonably
made, be removed for trial to any district agreed upon by stipulation between the parties,
or, in case of failure to so stipulate within a reasonable time, the claimant may apply
to the court of the district in which the seizure has been made, and such court (after
giving the United States attorney for such district reasonable notice and opportunity to
be heard) shall by order, unless good cause to the contrary is shown, specify a district
of reasonable proximity to the claimant's principal place of business, to which the case
shall be removed for trial.
"At the time the order was made the United States Attorney appeared with
counsel for the intervenor or claimant and then insisted that the only order
that could be properly made was one transferring and removing the case to the
Western District of Washington, being a district of reasonable proximity to
the claimant's principal place of business. The court was then of the opinion
that the statute contemplated a place for holding court as near to the principal
place of business of the claimant as practicable. Such a place of holding court
was at Portland, Oregon. A hurried interpretation of the statute seemed to
warrant the court in removing the case for trial to that point. The District
Attorney did not agree to the order and, as indicated, has subsequently filed a
motion to vacate the order of removal. The parties have favored the court
with briefs and suggestions in support of their respective contentions. Con-
gressional records showing the history of the legislation indicate that the
Senate attempted to provide that a case of this kind might be removed and
transferred to the district court in which claimant's principal place of business
was located, while, on the other hand, the House of Representatives attempted
to provide that the removal could be made only to a district court of a state
contiguous to the state of claimant's principal place of business. Both the
Senate and House receded from their several extreme positions. The Senate
no longer contended that the transfer should be made to a state contiguous to
that of the claimant's domicile. The compromise involved the use of the words
'a district of reasonable proximity to the claimant's principal place of business.'
In order to give a proper meaning to the statute, in view of the concessions made
by the two legislative bodies, a district of reasonable proximity would mean a
district other than that of the domicile of the claimant, whether in the same
state or a contiguous state. Oregon has but one district, whereas the State of
Washington has two districts. The Western District of Washington, Southern
Division, is a district of 'reasonable proximity to the claimant's principal place
of business.'
"1. A statement of the facts and the law, as above, suggests a proper inter-
pretation of the statute and what order should be made in the case. This is not
a case of first impression.
"In the case of United States v. 6 dozen bottles, etc., 55 Fed. Supp. 458,
Judge Duffy of the District Court of the Eastern District of Wisconsin, was
presiding in a similar case. That case, however, had been transferred to his / ? -
district from one of the district courts in the State of Washington. The claimant V
in that case had originally applied to one of the district judges in one of the
districts of Washington to transfer the case to the Northern District of Illinois
for the reason that the claimant's principal place of business was in Chicago.
The District Judge declined to transfer the case to the Northern District of
Illinois but did order its removal or transfer to the Eastern District of
Wisconsin, being a district of reasonable proximity to the claimant's place of
business. After the transfer to that district of reasonable proximity the
claimant renewed its motion for a transfer to the Northern District of Illinois.
While District Judge Duffy ruled that the claimant had exhausted his right
of removal as having been accorded by statute but one removal, nevertheless he
took occasion to say :
Manifestly, claimant's application for removal to the district court in Illinois was not
granted by the district court in Washington, because the same would not have oeen and
is not authorized. In the absence of stipulation between the parties, the power of
removal of the court of original jurisdiction is limited and restricted. Such court is
required to order removal to "a district of reasonable proximity to the claimant's
principal place of business." Accordingly, it would have been beyond the power of the
district court in Washington to have removed this proceeding to the designated district
court in Illinois.
"2. Moreover, in this case, the claimant apparently so interpreted the
statute for the reason that, in its motion to transfer it said:
Intervenor further states that the United States District Court next closest to Inter-
vener's place of business is the District Court of the United States for the District of
Washington, Western District, Southern Division, sitting at Tacoma, Washington,
which said district court is approximately 150 miles from Portland, Oregon.
Wherefore, Intervenor prays that said cause be transferred and removed from this
Court to a district of reasonable proximity to Intervener's principal place of business.
It will be observed that the intervenor does not ask that the case be trans-
ferred to the district in which the claimant's principal place of business is
located.
"In view of the above, the order of removal transferring the case for trial
to the District Court of Oregon, sitting at Portland should be amended so
that the order of removal will be to the Western District of Washington,
Southern Division, at Tacoma, Washington, and it will be so ordered."
In accordance with the above opinion, an order was entered on March 23,
1945, providing that the order of March 1, 1945, be vacated and that the libel
proceedings in the Western District of Missouri be removed to the Southern
Division of the Western District of Washington.
On April 23, 1945, the claimant filed in the United States District Court for
the Western District of Washington, Southern Division, exceptions to the
libel proceedings so removed, based on the grounds (1) that the libel failed
to state facts sufficient to constitute a cause of action and (2) that the printed
matter did not accompany the product or constitute labeling of the product.
On March 25,1946, after consideration of the arguments of counsel, an order
was entered overruling and denying the exceptions to the libel. Thereafter,
on stipulations of the parties, an order was entered directing the consolida-
tion for trial, in the Western District of Washington, of the case removed
from the Western District of Missouri, with the two libel proceedings originally
instituted in the Western District of Washington and the libel proceeding
originally instituted in the Southern District of California.
An answer was filed by the claimant, denying the pertinent allegations of
the libel; and on October 22, 1946, the case came on for trial before the court
and jury. On November 1, 1946, the trial was concluded with the return of
a verdict in favor of the Government. On November 22, 1946, judgments of
condemnation were entered and it was ordered that the circulars be destroyed
and that the product be subsequently disposed of as ordered by the court.     /
The case was appealed to the Court of Appeals for the Ninth Circuit; and    \
on April 2,1948, the following opinion was handed down by that court, affirm-
ing the judgment of the district court:
GAEEECHT, Circuit Judge: "In four cases consolidated for trial, judgments
and decrees were entered condemning and ordering destroyed quantities of a
proprietary drug known as 'Nue-Ovo' and certain written material alleged
to constitute the labeling thereof. The action of the court below was taken
pursuant to libels alleging misbranding, under 21 USCA ?352 (a). From the
judgments and orders referred to, the present appeals have been taken by the
intervenor below, as claimant of the property seized.
"The appellant, an Oregon corporation, has engaged in the manufacture,
sale, and distribution of proprietary drug products known as 'Nue-Ovo,' 'Sal
Trag,' and 'Burvidin' continuously since 1925. The formulas of the products
have been changed from time to time, and the merchandise now under seizure
differs from products of the same name involved in previous litigation.
"Nue-Ovo is sold direct to consumers. In concentrated form, called 'Sal-
Trag,' it is sold to licensed physicians. The products are manufactured at
Portland, Oregon, and shipped to purchasers and distributors in most of the
states west of the Mississippi River. The appellant's direct sales program
involves extensive use of advertisements in daily and weekly newspapers and
similar publications. In general, these advertisements solicit mail inquiries
regarding the effectiveness of Nue-Ovo in the treatment of arthritis, neuritis,
rheumatism, sciatica, and lumbago, to which inquiries the appellant replies
by mail.  The advertisements referred to are not, of course, part of the labeling.
"In November, 1944, a libel was filed in the United States District Court
for the "Western District of Missouri, Western Division, pursuant to which
there were seized by the United States Marshal about 600 units of Nue-Ovo,
each unit containing three bottles. Some of the unit cartons are labeled in
part:
Active Ingredients: An aqueous extraction of Plume Thistle, Burdock, Quassia, Sage,
Cinnamon, Horehound, Dandelion, Kola Nut, Ginseng, Althea, Cascara and Licorice.
This is the regular Nue-Ovo Formula to which have been added laxatives.
Less than one-half of one per cent Sodium Benzoate added as a preservative.
Other unit cartons are labeled in part:
This is the regular Nue-Ovo formula to -which have been added Cascara, Licorice and
Sodium Salicylate. Less than one half of one per cent Sodium Benzoate added as a
preservative.    Vitamin Bl added.
"The libel alleges that 600 units were shipped by the Appellant on or about
June 27, 1944, and August 2, 1944, from Portland to Crown Drug Company,
Kansas City, Missouri.
"Pursuant to the same libel there were also seized at the same time stocks of
circulars entitled 'information on Nue-Ovo and its value in Arthritic and other
Rheumatoid symptoms.' The circulars were alleged to have been shipped in
interstate commerce on or about April 7 and August 8, 1944, from Chicago,
Illinois, by Nue-Ovo, Inc.-not the appellant herein-to the Crown Drug Com-
pany at Kansas City.
"The libel alleges that:
The article is misbranded within the meaning of 21 U. S. C, 352 (a) in that the
statements in the attached Exhibits "A" and "B" which appear in the labeling of the
article . . . are false and misleading in this, that such statements represent and suggest
and create in the mind of the reader thereof, the impression that the article of drug,
Nue-Ovo, is effective in the treatment of arthritis, rheumatism, neuritis, sciatica, and
lumbago, whereas, the article is not effective in the treatment or such conditions.
"Other seizures were made later pursuant to libels following the same general
pattern as the foregoing.
"The proceedings were all removed to the court below, where they were
consolidated for trial in accordance with the provisions of 21 USCA ? 334 (b).
"The court below entered a pre-trial order which specified as an agreed fact
that 'the labeling alleged in the several libels constituted the labeling of the
product seized.'
"The agreed issues were stated in the pre-trial order as follows:
1.?Whether or not the Nue-Ovo under seizure is ineffective in the treat-
ment of arthritis, rheumatism, neuritis, sciatica, or lumbago.
2.?Whether or not the labeling under seizure suggests to the user that
the Nue-Ovo is effective in the treatment of arthritis, rheumatism,
neuritis, sciatica, or lumbago.
3. Whether or not the-product is misbranded by reason of the labeling.
"The appellant admitted that the labeling represented the product to be
effective.   Thus the misbranding and the ineffectiveness of the product were the      /
issues to be litigated.
"Summarized, the appellant's attacks upon the judgment below are as
follows:
1.?The court below erred in submitting issues to the jury, since every
statement in the labeling as to the effectiveness of the product is a
statement of opinion, and at the conclusion of the case the record
showed nothing more than a difference of opinion among qualified
medical experts as to the effectiveness of the product.
2.?The court erred in receiving testimony intended to show a mislead-
ing of the witnesses by material that was not part of the labeling
seized.
3.?The court erred in instructing the jury as to the elements to be
taken into account in determining whether the labeling is mislead-
ing, under 21 USCA 321 (n), infra.
4.?If it should be held that the court did not err in giving an instruction
based upon 21 USCA 321 (n), infra, the court's denial of the appel-
lant's motion for the release of the product under bond was an abuse
of discretion.
5.?As applied by the court the statute is unconstitutional.
"If the first four objections urged by the appellant are found to be untenable,
the fifth must fall of its own weight and need not be discussed.
1. The Rule in the McAnnulty Case
"The appellant bases its first contention upon a line of decisions commencing
with American School of Magnetic Healing v. McAnnulty, 187 U, S. 94, 105-106.  .
There the court said:
As the effectiveness of almost any particular method of treatment of disease is, to a
more or less extent, a fruitful source of difference of opinion, even though the great
majority may be of one way of thinking, the efficacy of any special method is certainly
not a matter for the decision of the Postmaster General within these statutes relative
to fraud. Unless the question may be reduced to one of fact as disinguished from mere
opinion, we think these statutes cannot be invoked for the purpose of stopping the
delivery of mail matter.
"Although the McAnnulty case was decided four years before the passage of
the original Food and Drugs Act of June 30, 1906, c. 3915, 34 Stat. 768, the
doctrine there announced was applied to the misbranding of drugs in United
States v. Johnson, 221 U. S. 488, 498-499 (1911), and in Seven Cases of Eckman's
Alterative v. United States, 239 U. S. 510, 517 (1916).
2. Three IAmitations to the McAnnulty Rule
"It should be borne in mind, however, that the McAnnulty case, supra, was
heard on a demurrer and involved the Postmaster General's power to decide
what was in reality a medical question, as to which he would presumably have
no professional training.
"It cannot be assumed that the Supreme Court intended to reach out a dead
hand over the power of Congress to pass legislation in the future setting up a
well-equipped Federal agency capable of arriving at a professional conclusion as
to the adulteration or misbranding of drugs 'when introduced into or while in
interstate commerce.' 21 USCA ? 334 (a). In the McAnnulty case the court
not only pointed out that 'as the case arises on demurrer, all material facts
in the bill are of course admitted,' but throughout the opinion doubt was
expressed as to the qualifications of a postmaster general to pass on medical
questions.
"In the excerpt which we have already quoted, the Supreme Court expressed
the view that 'the efficacy of any special method [of treatment of disease] is
certainly not a matter for the decision of the Postmaster General within these
statutes relative to fraud.' Again, on page 105 of the opinion, referring to
the place of electricity in therapeutics, the court pointedly asks: 'Was this
kind of question intended to be submitted for decision to a Postmaster /
General,   .   .   .?'
"On the following page, the court thus summarized its holding as to the
Postmaster General's power under the mail fraud statutes:
Other Instances might be adduced to illustrate the proposition that these statutes
?were not intended to cover any case of what the Postmaster General might think to be
false opinions, but only cases of actual fraud in fact, in regard to which opinion formed
no basis.
"Even in that case, however, the court conceded that the Postmaster General
might make a showing that fraud was being committed:
In overruling the demurrer we do not mean to preclude the defendant from showing
on the trial, if he can, that the business of complainants as in fact conducted amounts
to a violation of the statutes as herein construed. [Cf. Leach 1. Carlile, 258 U. S. 139,
139, 140.]
"And in Seven Cases of Eckman's Alterative v. United States, supra, 239
U. S. at page 518, Mr. Justice Hughes said:
It cannot be said, for example, that one who should put inert matter or a worthless
composition in the channels of trade, labeled or described in an accompanying circular
as a cure for disease when he knows it is not, is beyond the reach of the law-making
power. Congress recognized that there was a wide field in which assertions as to
curative effect are in no sense honest expressions of opinion but constitute absolute
falsehoods and in the nature of the case can be deemed to have been made only with
fraudulent purpose.
"In contrast to the meager technical facilities for the determination of medi-
cal questions possessed by the Postmaster General-at least at the time that
the McAnnulty case was decided-we find that the Federal Security Agency
has at its disposal almost unlimited professional resources with which to carry
out its investigations in the enforcement of the Federal Food, Drug, and Cos-
metic Act of June 25,1938, c. 675, 52 Stat. 1040, 21 USCA ? 301 et seq. Typical
of this elaborate set-up are the provisions of 21 USCA ? 372 (a):
The Administrator is authorized to conduct examinations and investigations for the
purposes of this chapter through officers and employees of the Agency or through any
health, food, or drug officer or employee of any State, Territory, or political subdivision
thereof, duly commissioned by the Administrator as an officer of the Agency. [Emphasis
supplied.]
"As we shall disclose in our discussion of the evidence hereinafter, this exten-
sive professional implementation authorized by the statute under consideration
was fully utilized in the case at bar.
"In view of the foregoing, it could well have been reasoned a priori that the
impact of the McAnnulty case would be carefully limited in later decisions.
And that is precisely what has occurred.
"As was said in United States v. 7 Jugs, etc., of Dr. Salsbury's Rakos (DC
Minn.), 53 F. Supp. 746, 759, heavily relied upon by the appellant itself:
Moreover, it must be obvious that tremendous advancements in scientific knowledge
and certainty have been made since the rule in the McAnnulty case was first announced.
Questions which previously were subjects only of opinion have now been answered with
certainty by the application of scientifically known facts. In the consideration of the
McAnnulty rule, courts should give recognition to this advancement.
(a) Jury May Consider Testimony as to Actual Experiments
"Much of the appellee's evidence in the instant case consisted of 'controlled
clinical studies' conducted by eminently qualified physicians and surgeons.
"Dr. Frances Baker, Director of the Department of Physical Medicine at the
University of California, whose professional qualifications appear to be highly
impressive testified at great length regarding a clinical study that she made
in 1944 with Nue-Ovo that contained cascara and licorice, but not B-l and
salicylate. The study was made on patients in the orthopedic clinic at the
University of California Hospital. At the end of two months, five of the
patients 'were no better at all' and 'one felt better.' As the result of her
studies, Dr. Baker testified that she thought that Nue-Ovo 'offers us nothing that
is of value in the treatment of arthritis.' She expressed similar opinions as
to Nue-Ovo's effectiveness in eases of lumbago, sciatica, neuritis, and rheuma-
tism, and stated that the addition of sodium salicylate and Vitamin B-l in
quantities found in one type of Nue-Ovo would not 'give us any value what-
ever.'
"Dr. John H. Wheeler is a practicing physician in Kansas City, Missouri, and
is on the teaching staff of the University of Kansas, in Kansas City, Kansas.
In 1944, at the request of the Food and Drug Administration in Kansas City,
877437-50?3
he made a study of Nue-Ovo in the Out-Patient Department of the University
of Kansas. The type of Nue-Ovo that he used was that containing cascara
and licorice, without the B-l and salicylates. Six patients were asked to con-
tinue the medicine for six weeks. Dr. Wheeler testified that the medicine
had 'no effect whatsoever' on three patients, and two patients stated that they
'were of the opinion . . . that they were no worse.' On the day of his return,
the sixth patient 'felt that he had definitely improved while taking his Nue-Ovo,'
but 'was complaining of some new pains involving both knees.' This sixth
patient, however, made that report ten months after starting the medication
with Nue-Ovo, and still had some of the six weeks' supply of the medicine left.
"In 1940, Dr. Wheeler 'had experience' with Nue-Ovo with no added cascara
or licorice with twenty-three patients, nine of whom took the preparation for
as long as three months. Some took it for as short a period as two weeks, in
one case because the discomfort was so great that the patient desired some
other type of medication. Of the twenty-three cases, there were eighteen upon
whom Nue-Ovo had no 'effect whatsoever,' three were 'questionable, in that
perhaps their symptoms had improved slightly over the . . . previous period
of nine
 months,' and 'two were definitely of the opinion that they felt better.'
Based upon his total experience with the product in 1944 and the product in
1940, Dr. Wheeler's opinion was that, with or without cascara, licorice, or
sodium salicylate or thiamine in the amount stipulated, Nue-Ovo's 'effectiveness
is nil' in the treatment of arthritis, rheumatism, lumbago, neuritis, and sciatica.
"Testimony of experts that is based upon tests or experiments made by them
does not come within the ambit of the McAnnulty rule. In Elliott Works v.
Frisk (DO Iowa), 58 F. 2d 820, 825, the problem was fully and lucidly discussed:
Complainants are mistaken in their claim that the only evidence introduced as against
them was mere opinions of witnesses and that the opinion of the expert for the govern-
ment should not be considered as substantive evidence. In this contention complainants
reply upon the case of American School of Magnetic Healing v. McAnnulty, 187 U. S.
94, 23 S. Ct. 33, 47 L. Ed. 90. The facts here are entirely different from what they are
in that case, which arose on a demurrer wherein all the material facts averred in the
bill were admitted for the purpose of the hearing. It may be conceded that the court
there held that mere matters of opinon on which witnesses might vary in their con-
clusions would not substantiate a fraud order such as is here under consideration; but
the finding of the solicitor in this case is not based on opinions, but upon a scientific
investigation, findings, and tests made by the United States Bureau of Standards.
Opinions of experts when founded upon known scientific facts are not to be considered
the same as opinions of laymen, but are considered by the courts as substantive evi-
dence. (Cases cited.) However, the evidence upon which the facts here were found
was not alone based upon such scientific opinions, but upon tests made and facts actually
disclosed by independent research of experts in an outstanding scientific bureau of the
national government. [See also Kar-Ru Chemical Co. v. United States (CCA 9), 264
F. 921, 928; United States v. Lesser (CCA 2). 66 F. 2nd 612, 616; United States v. 1
Jugs, etc., of Dr. Salsbury's Kakos, supra, 53 F. Supp. at pages 758-759.]
(b) Testimony of Experts as to Consensus of Scientific Opinion Is Also Relevant
"Dr. James M. Dille, professor of pharmacology and assistant dean of the
School of Medicine of the University of Washington, while on the witness
stand went down the list of ingredients of Nue-Ovo and categorically reported
that scientific 'investigation' by 'doctors or pharmacologists' has shown that
many of the ingredients have no 'action' as drugs. For example concerning
plume thistle, the first ingredient listed in the statement of 'agreed facts',
Dr. Dille said:
It has no action that doctors or pharmacologists can find, at all.
"Again, as to ginseng, another Nue-Ovo ingredient, Dr. Dille said:
... as modern pharmacology developed and they made all sorts of investigations
on ginseng, they found that it is absolutely without any potent principal (principle?)
of any value to medicine.
"It is generally agreed that testimony as to the consensus of medical opinion
may be considered in drug-misbranding cases. In United States v. Dr. David
Roberts Veterinary Co. (CCA 7), 104 F. 2d 785, 788, the court said:
In support of this count the testimony disclosed that the product does not contain
ingredients which would be effective as a treatment for shoeboils or poll evil; that
it has no value in the treatment of enlarged glands; and that no drug or mixture of
drugs is known to the profession generally, or agreed upon by the consensus of veterinary
opinion, that can do all of the things claimed by this label.
The record also discloses that the professional witnesses for the government testified
that the opinions expressed by them were in accord with the consensus of medical
opinion.    *    *    *
In the instant case, the question was reduced to one of fact, as distinguished from
mere opinion, [cases cited], and, as defendants' testimony made for conflicting evidence,
a question of weighing the evidence was presented. To weigh the evidence is not
within the power of this court.    [See olso 28 C. J. S. Druggists ? 12 k (2), page 531.]
(c) Even Opinion Testimony as to Therapeutic Value is Admissible
"In this circuit and elsewhere, it has been held that expert testimony even
in its broadest sense-i. e., where the witness has neither tested the product
nor purports to report the consensus of medical opinion-is admissible on the
question of therapeutic value.
"In John J. Fulton Co. v. Federal Trade Commission (CCA 9), 130 F. 2d
85, 86, certiorari denied, 317 U. S. 679, we said:
The findings have support in the testimony of expert witnesses called by the Com-
mission. But the petitioner argues that since none of the experts had prescribed
Uvursin or observed its effects in concrete cases their testimony was incompetent and
inadmissible. We think otherwise. The witnesses were shown to possess wide knowl-
edge in the field under inquiry. There is no reason to suppose them incompetent to
express an opinion as to the lack of therapeutic value of petititioner's preparation
merely because they had had no personal experience with it in the treatment of the
disease. Their general medical and pharmacological knowledge qualified them to
testify.    [Cases cited.] 
"The same doctrine has been followed in misbranding cases tried before
juries. In Goodwin v. United States (CCA 6), 2 F. 2d 200, 201, cited by us
with approval in the Fulton case, supra, it was said:
Upon the trial of the issue of fact joined by the libel charging the misbranding of
mineral water and the answer of the intervener, expert evidence may be properly
admitted. If it appears from the testimony of a witness upon preliminary examination
that he is learned in the science of chemistry or has been regularly and legally admitted
to the practice of medicine, and that he has knowledge of the drug elements contained
in the article transported in . . . interstate commerce and their efficacy or lack of efficacy
as curative agents, used either separately or in combination in the treatment of the
diseases specified on the label, his opinion on that subject is competent evidence regard-
less of whether he has had actual experience or observation of the effect of the use of
such drugs in the exact form in which they are transported in interstate commerce.
The weight of his evidence is a question for the jury.    [Emphasis supplied.]2
The evidence in this case included the three types that we have discussed
hereinabove: Testimony by experts based on (a) tests made of the product
itself; (b) the consensus of medical opinion as to the various ingredients
used in Nue-Ovo; and (c) the expert witnesses' personal opinions regarding
the effectiveness of such ingredients. Altogether, there was ample evidence
to support the verdict of the jury.
3. Much of the Factual Evidence of the Appellee Consisted of Other Than
Medical Testimony
"It will be remembered that in the Eckman's Alterative case, supra, Mr.
Justice Hughes has pointed out that Congress has 'recognized that there was
a wide field in which assertions as to curative effect are in no sense honest
expressions of opinion but constitute absolute falsehoods.' In the instant
case, the appellee presented factual evidence of definite untruths and half-
truths contained in the labeling of Nue-Ovo. This evidence did not come from
medical experts but from documents and from lay witnesses.
"The labeling purports to quote from a letter written by Mrs. Fred Anderson,
of Albany, Oregon, in part as follows:
I wish to say that after taking Nue-Ovo I feel like a new person, inasmuch as my
?;: nerves are 100? better-no trace of Neuritis left and a general built-up condition.
"This letter is one of a group that appears on the labeling, with the follow-
ing?-notation: 'Original letters on file in office. Copies may be obtained on
request.'
"In a 'motion to produce documents,' the appellee demanded that the orig-
inals of a number of these letters be produced by the appellant, including the
letter attributed to Mrs. Anderson.
"Mrs. Eleanor M. Felflman, president of the appellant, was unable to produce
the originals of at least four of the letters, including that of Mrs. Anderson.
Instead, 'copies' were offered.   Mrs. Feldman explained that in moving from
iSee also Irwin v. Fed. Trade Comm. (CCA 8), 143 F. 2d 316, 324; Charles of the Ritz
Distributors Corp. v. Fed. Trade Comm. (CCA 2), 143 F. 2d, 676, 678-679.
* See also 28 O. J. S. id.
steel file having disappeared from her office.
"Mrs. Anderson gave a deposition in which she stated that after taking the
first three or four bottles of Nue-Ovo she thought that her 'time had come';
that she didn't think it had done her any good; that she did not have neuritis,
but arthritis; that she did not write the letter, and could not account for it;
'How on earth they got my name is more than I know.' A former employee of
the appellant asked Mrs. Anderson to give him a testimonial, but she refused,
according to her deposition.
"Another part of the Nue-Ovo labeling contains two 'before-and-after' photo-
graphs of H. J. Shermer of Leaburg, Oregon, flanking the facsimile of a nota-
rized letter by him extolling the merits of that nostrum. The photograph taken
'before' Nue-Ovo shows Mr. Shermer in an emaciated condition, his weight being
given as 110 pounds. The post-Nue-Ovo photograph shows Mr. Shermer as he
appeared eighteen months later, weighing 165 pounds.
"In his letter, Mr. Shermer stated that he was first afflicted with arthritis
fifteen years prior to the date of writing, October 8,1934. After taking Nue-Ovo
for 18 months, Mr. Shermer wrote, he was able to attend to his business, pursue
his hobbies of hunting and fishing, 'and enjoy life generally.'
"C. W. Frazier, of Newburg, Oregon, who had been for sixteen years the
sheriff of Harney County, Oregon, himself a sufferer from arthritis or rheuma-
tism, or possibly both, saw the photographs and the facsimile letter of Mr.
Shermer. With the traditional skepticism of a peace officer, the former sheriff
decided to investigate. He called upon Mr. Shermer and found him sitting
by a trailer, with his feet on a padded stool and a pair of crutches at his side.
"Mr. Frazier wrote to the appellant about his 'disappointing visit' to Mr.
Shermer. In reply, Mrs. Feldman 'explained' that the 'back-set' was due to the
complete extraction of Mr. Shermer's teeth at one time and to overwork. Mrs.
Feldman further wrote that Nue-Ovo was helping Mr. Shermer 'for the third
time,' and she felt certain 'that now that he is free of responsibility and that
he and Mrs. Shermer can have a little more leisure time, he will make his third
recovery.'
"Still not satisfied with the outcome of the Shermer investigation, Mr. Frazier
called upon Mrs. Feldman in person.   Mr. Frazier testified:
Well, the conversation got a little exciting a time or two. Mrs. Feldman sort of
accused me of trying to make her out one damn liar, so she said. Why I told her, I said
"Mrs. Feldman, I wouldn't think of putting it that way," but I said "Tour advertising
I still question quite a little."
"Finally, the Nue-Ovo labeling contains an 'analysis of ingredients,' with
the prefatory explanation that it is based chiefly on the United States Dispen-
satory, the Pharmacopoeia, and various textbooks on pharmacology.
"It is here that half-truths enter the picture. While the label's 'analysis'
followed part of the language of the above-named authorities somewhat closely
and sometimes verbatim, there were significant omissions in the excerpts.
Here are a few of the deleted portions:
(Ginseng) The extraordinary medicinal virtues formerly described as [ascribed to]
Ginseng had no other existence than in the imagination of the Chinese.
(Horehound)    It has, however, been almost completely abandoned by physicians.
(Salvia or sage) For what reason this condiment was admitted into the N. F. is not
obvious. While the ancients say it is highly esteemed, there is no evidence that it pos-
sesses therapeutic virtues, and it is practically never prescribed by physicians.
(Lappa or Burdock) There is not sufficient reason, however, to believe it has any
medicinal virtues.
"The apocryphal or misleading testimonials and the scientific half-truths in
the labeling alone make out a case of actionable misbranding. As was said by
the Supreme Court in Donaldson v. Read Magazine, Slip Opinion, page 10,
decided on March 8,1948:
Advertisements as a whole may be completely misleading although every sentence
separately considered is literally true. This may be because things are omitted that
should be said,   .   .   .
As we shall see hereafter, this doctrine is specifically incorporated in the statute
now under consideration.   See 21 USCA ? 321 (n), infra.
4. There Was No Error in the Admission of Evidence of Misleading Material
Not part of the Labeling
"The appellant complains that the appellee sought to show that its 'lay
witnesses' had been misled by material that was not part of the labeling seized-
Particular criticism is directed against the questioning of 'witness after wit-
ness' regarding a newspaper advertisement in which Anna Pautz invited persons
suffering from arthritis, neuritis, rheumatism, sciatica and lumbago to com-
municate with her; and also regarding a letter in her handwriting and with her
signature, stating that she had been benefited by using Nue-Ovo. The appellant
concedes that the testimony showed that the letter in each instance that it
was sent out had not been written personally by Mrs. Pautz, but was the repro-
duction of a letter originally written and signed by her.
"To say that the appellant did not deal frankly with the public in connection
with the Pautz letter would be a distinct understatement. Further details are
necessary to bring out the complete shadiness of this publicity project, which
in the oral argument counsel for the appellant declined to defend.
"Mrs. Pautz, who was 76 years old at the time she testified, became a stock-
holder in the appellant about 1924, before using Nue-Ovo for arthritis. She
testified that it cured her.   She has never taken Nue-Ovo since 1923 or 1924.
"Beginning in 1945, there appeared in Portland newspapers, and later in other
publications in the United States the following advertisement:
Rheumatism and Arthritis
I suffered for years and am so thankful that I am free from pain and able to do my
work that I will gladly answer any one writing me for information.    Mrs. Anna Pautz,
P. O. Box 825, Vancouver, Wash.
Pd. Adv. Nue-Ovo Laboratories, 403 N. W. 9th Ave., Portland 9, Ore.
"At first, Mrs. Pautz financed the running of the advertisement and the rental
of the post office box out of her own funds. Later, however, according to Mrs.
Feldman's testimony, the appellant apparently took over the advertising costs,
through a block advertising agency:
Mrs. Pautz is quite an old lady, and a very sweet old soul. When I found she was
running it, I certainly wouldn't permit her to pay for it.
"A month or two after the advertisement first appeared, in a Portland
newspaper, Mrs. Pautz composed and wrote out the letter in question, no one
helping her with it. Her motive for doing so was just because she 'wanted
to help somebody.'
"The letter contained the salutation 'Dear Friend,' and advised sufferers
from arthritis and rheumatism to visit or write to the appellant's headquarters.
In the letter Mrs. Pautz gave the Vancouver post office box as her mail address.
"Mrs. Pautz testified that at the time she wrote the letter, she did not own
any stock in the appellant, having sold her shares to one of her sisters.
"Mrs. Pautz actually lives in Portland, which has been her home for fifty-
eight years. The evidence adduced by the appellant as to why Mrs. Pautz gave
the Vancouver address is contradictory. Mrs. Pautz herself testified that she
never used the Vancouver box for her personal mail and that Vancouver was
selected-
Because there is a girl working in the laboratories at Vancouver, Washington, and
she could pick up the mail and bring it to the laboratories.
"Mrs. Feldman gave a different explanation of the Vancouver arrangements.
She testified that the appellant has a contract with a transfer company to pick
up the mail from the Vancouver box and take it to Portland, where, as we have
seen, both Mrs. Pautz and the appellant have their domiciles. The replies to the
letters thus received are then carted back to Vancouver and mailed there, by
'that same man that brings the letters.'
"When she was asked why this roundabout way of handling Mrs. Pautz' mail
is employed, Mrs. Feldman repeatedly gave this cryptic reply:
Because it is convenient.
"The handwritten letter of Mrs. Pautz was mimeographed and sent out
directly from the appellant's laboratories without any notation or other dis-
closure to the addressee that it is being sent from the appellant's headquarters,
or that the appellant has had it mimeographed. The envelopes in which the
Pautz letters are sent out are addressed in handwriting, although all the other
correspondence of the appellant goes out in typed envelopes.
"The evidence on this point makes it quite clear that it was the appellant's
intention to have the recipients of the Pautz letters believe that Mrs. Pautz
herself had written each individual letter and had mailed it at Vancouver.
"After Mrs. Pautz's letter was sent out, the office of the appellant customarily
mailed to those answering her advertisement a letter in which it was stated
that Mr. and Mrs. Pautz usually have some Nue-Ovo 'on hand and take it for a
time every Spring as more or less of general tonic' This statement is in direct
contradiction to Mrs. Pautz's testimony that she had not used Nue-Ovo since
1923 or 1924.
"Both sides agree that 'the question of good faith and the question of intent
is not involved' in this case; that 'the Government does not have to show a
fraudulent intent on the part of the shipper or manufacturer'; and that,
'conversely, if it is shown that the product proceeded against is adulterated
or misbranded, then good faith or a lawful intent will not constitute a defense.'
"Prior to 1938, when the present Food, Drug, and Cosmetic law was enacted,
the statute did provide that an untrue statement in the labeling of a drug
product had to be 'false and fraudulent' \n order to render the product subject
to condemnation for misbranding. Section 10 of the 1927 edition of 21 USCA
read in part as follows:
? 10     Misbranded articles.   For the purpose of sections 1 to 15, inclusive, of this
title, an article shall be deemed to be misbranded;
Drugs.    In case of drugs.
False statement of curative or therapeutic effect.-Third. If its package or label shall
bear or contain any statement, design, or device regarding the curative or therapeutic
effect of such article or any of the ingredients or substances contained therein, which is
false and fraudulent.    [Emphasis supplied.]
"The present law requires only that the labeling, be 'false or misleading in
any particular' in order to bring the drug within the definition of 'misbranded.'
21 USCA 352 (a).
"This does not mean, however, that under the present law the appellee, in
presenting to the jury a fair and complete picture of the claimant's activities,
must sedulously avoid adducing any evidence of fraud. As the appellee points
out-
In the instant case, the jury had the right to know that whatever propensity the
purchasers of Nue-Ovo might have had to analyze had been reduced to a minimum by the
groundwork laid by Appellant. In determining whether the labeling suggests to the
user that Nue-Ovo is effective in the treatment of arthritis, rheumatism, neuritis,
sciatica, and lumbago, we submit that it was proper for the jury to consider the labeling
representations in the light of the setting in which the manufacturer intended the
user to read them.
"It is well settled that the 1938 act was intended to make the provisions
against misbranding stricter and not more lenient than they had been in pre-
existing laws. The new statute was not designed to provide the misbrander of
drugs with additional technical loopholes for escape, but to batten down those
already existing.
"The evidence of the Congressional intent, as construed by the Supreme
Court of the United States, is impressive. In United States v. Dotterweich,
320 U. S. 277, 280-282, the court said:
The Food and Drugs Act of 1906 was an exertion by Congress of its power to keep
impure and adulterated food and drugs out of the channels of commerce. By the Act
of 1938, Congress extended the range of its control over illicit and noxious articles
and stiffened the penalties for disobedience. The purposes of this legislation thus
touch phases of the lives and health of people which, in the circumstances of modern
industrialism, are largely beyond self-protection. Regard for these purposes should
infuse construction of the legislation if it is to be treated as a working instrument of
government and not merely as a collection of English words. [Cases cited] The
prosecution to which Dotterweich was subjected is based on a now familiar type of
legislation whereby penalties serve as effective means of regulation. Such legislation
dispenses with the conventional requirement for criminal conduct-awareness of some
wrongdoing. In the interest of the larger good it puts the burden of acting at hazard
upon a person otherwise innocent but standing in responsible relation to a public danger.
[Case cited] And so it is clear that shipments like those now in issue are "punished
by the statute if the article is misbranded [or adulterated], and that the article may
be misbranded [or adulterated] without any conscious fraud at all. It was natural
enough to throw this risk on shippers with regard to the identity of their wares. . . ."
United States v. Johnson, 221 U. S. 48?, 497-98.
'        *
* * * Nothing is clearer than that the later legislation was designed to enlarge
and stiffen the penal net and not to narrow and loosen it. This purpose was unequivo-
cally avowed by the two committees which reported the bills to the Congress. The
House Committee reported that the Act "seeks to set up effective provisions against
abuses of consumer welfare growing out of inadequacies in the Food and Drugs Act
of June 30, 1906." (H. Rep. No. 2139, 75th Cong., 3d Sess., p. 1.) And the Senate
Committee explicitly pointed out that the new legislation "must not weaken the exist-
ing laws," but on the contrary "it must strengthen and extend that law's protection
of the consumer."    (S. Rep. No. 152, 75th Cong., 1st Sess., p. 1)
"Furthermore, the Act is remedial, and should be liberally construed so as
to carry out its beneficent purposes. In United States v. 95 Barrels of Vinegar,
265 U. S. 438, 442-443, the court said:
The statute is plain and direct. Its comprehensive terms condemn every statement,
design and device which may mislead or deceive. Deception may result from the use
of statements not technically false or which may be literally true. The aim of the
statute is to prevent that resulting from indirection and ambiguity, as well as from
statements which are false. It is not difficult to choose statements, designs and devices
which will not deceive. Those which are ambiguous and liable to mislead should be
read favorably to the accomplishment of the purpose of the Act.    [Emphasis supplied.] *
"We do not think that we would be construing the statute in accordance with
the Congressional purposes if we were to hold that it was reversible error for
the appellee to be allowed to introduce evidence regarding the 'indirection'
employed by the appellant in connection with the shuttling of the Pautz mail
back and forth between Vancouver and Portland, Oregon. One would have to
be quite naive not to discern in this subterfuge, the thinly disguised purpose
of causing the public to believe that there was no connection "between the
appellant and Mrs. Pautz.
"It is true that the letter was not part of the labeling. It was, however,
part and parcel of the appellant's questionable promotional methods, some
of which were reflected in the labels, as was amply disclosed by the evidence
to which we have referred in the preceding section. It was not error for
the court below to permit the appellee to lay before the jury the entire picture.
5. There Was No Error in the Instruction Regarding the Test to Be Applied in
Determining Whether the Labeling Is Misleading
"The appellant complains that the 'error' in the admission in evidence of
the Pautz letter and advertisement, supra, was 'compounded' when the court
instructed the jury on 21 USCA ? 321 (n).   That subsection reads as follows:
(n) If an article is alleged to be misbranded because the labeling is misleading, then
in determining whether the labeling is misleading there shall be taken into account
(among other things) not only representations made or suggested by statement, word,
design, device, or any combination thereof, but also the extent to which the labeling
fails to reveal facts material in the light of such representations or material with
respect to consequences which may result from the use of the article to which the
labeling relates under the conditions of use prescribed in the labeling thereof or under
such conditions of use as are customary or usual.
"The objection is not that the instruction as to this subsection was erroneous
per se, but that the error lay in giving any instruction as to that provision of\
the statute. The appellant contends that 'the instant libels make no general\ ;
charge of misbranding under which the appellee is entitled to rely upon Section y.
201 (n) of the Act, [21 USCA ? 321 (n) ] supra,' but that the present charge is
'merely that the product is not effective.' 'Certainly,' it is argued, 'no reference
to Section 201 (n) appears in any of the pleadings or the pretrial order,' etc.
"In making this attack upon the court's instruction as to the subsection in
question, the appellant seems to forget the half-truths in the labeling to which
we have referred in a preceding sectido herein\lt will be remembered that,
though the appellant announceoSin its label thaffrts 'analysis of Ingredients'
was based chiefly on the United States Dispensatory, the Pharmacopoeia, and
various textbooks, and although it did indeed quote verbatim from some of these
authorities, it unfairly omitted unfavorable comments regarding some of Nue-
Ovo's ingredients.
"It was to cover precisely such tricky omissions and suppressions that Sec-
tion 321 (n) was designed.
"Furthermore, in any case where 'an article is alleged to be misbranded
because the labeling is misleading' in any respect, it is made mandatory by
? 321 (n) itself that the jury 'shall' take into account such omissions or sup-
pressions. In the instant case, the third agreed issue in the pretrial order
was 'Whether or not the product is misbranded by reason of the labeling.'
In the libels themselves, it is set forth that the article 'was misbranded . . .
in that the statements . . . which appear in the labeling . . . are false and mis-
leading in this,' etc.
* See also U. S. v. Dotterweich, supra, 320 TJ. S. at page 282; U. S. v. Antikamnia Co.,
231 U. S. 654, 667; U. S. v. John J. Fulton Co. (CCA 9), 33 F. 2d 506, 507; U. S. v.
62 packages, more or less, of Marmola Prescription Tablets (DC Wis.), 48 F. Supp. 878,
887. affirmed, 142 F. 2d 107, certiorari denied, 323 U. S. 731-732; 50 Am. Jur., Statutes,
? 395, page 420.
"Accordingly, it was not only not erroneous for the court to instruct the
jury on ? 321 (n), but, under the facts of this case and under the terms of the
subsection itself, it was the court's duty to do so.
6. The Court Did Not Abuse Its Discretion in Refusing to Release the Product
under Bond
"Finally, the appellant asserts that, even if this court should hold 'that the
verdict may be construed as finding merely mislabeling consisting of the failure
to disclose the difference of opinion among the experts,' etc, then 'fairness to
appellant requires the release of the product under bond to permit amendment
of the labeling and the [lower] court's denial of appellant's motion for that
relief is an abuse of discretion,' etc.
"As we have tried to show, however, the appellee's evidence was not confined
to 'opinion among the experts,' but was definitely factual.
"In denying the application for the release of Nue-Ovo under bond, the
court below said:
. . . [Nue-Ovo] hasn't any intrinsic value for food or for uses other than a medicinal
use. The jury has determined that it hasn't any value for that purpose, so it would
be inconsistent, it seems to me, for me to hold that it should be preserved and released
to the claimant.
"It is well settled that the trial court, in a case of this kind, shall exercise
its sound discretion as to whether the article shall be released under bond.
United States v. Two Cans of Oil of Sweet Birch, etc. (DC N. Y.), 268 F. 866,
867; United States v. 11$ Packages, etc., of Nue-Ovo (DC Wash.), 51 F. Supp.
1, 2; United States v. 1322 Cans More or Less, of Black Raspberry Puree (DC
Ohio), 68 F Supp. 8S1,882.
"After careful consideration of the 1100-page record in this case, we are
convinced that the court below exercised its discretion soundly and judiciously.
We believe that the interests of the public will be better subserved by having
this product kept off of the market altogether.
"The judgments are affirmed."
petition for certiorari was filed on July 1, 1948, in the United States
Supreme Court on behalf of the claimant, but was denied on October 18, 1948.
February 14, 1949, an order was entered directing that the product and
the printed matter be destroyed.