In the Matter of the Petition by ) January 9, 1961 ) GREAT AMERICAN PUBLICATIONS, INC. ) 270 Madison Avenue ) P.O.D. Docket No. 1/220 New York 16, New York ) ) for a hearing upon its application ) for second class mailing privileges ) for its publication "SPORTS CAR GUIDE".) APPEARANCES: Milton S. DuBroff, Esq. & Leonard A. Weinberger, Esq. 260 Madison Avenue New York 16, New York for the Petitioner Jack T. DiLorenzo, Esq. Office of the General Counsel Post Office Department for the Respondent Kelly, Raymond J. POST OFFICE DEPARTMENT Washington 25, D.C.
This matter comes before the Judicial Officer through an appeal and exceptions filed by the Director, Postal Services Division, Bureau of Operations, Respondent herein, from the Initial Decision of the Hearing Examiner filed on June 15, 1960 and upon Respondent's supplemental exceptions to the Supplemental Initial Decision of the Hearing Examiner filed October 5, 1960.
On July 1, 1959, Great American Publications, Inc., 41 East 42nd Street, New York, New York, the Petitioner herein filed application on P.O.D. Form 3501 (Joint Exhibit No. 1) for entry into the mails as second-class matter, for its publication SPORTS CAR GUIDE (Joint Exhibit No. 4) - the September 1959 issue of the Publication (Joint Exhibit No. 4) accompanied the application. A second P.O.D. Form 3501 (Joint Exhibit No. 2) was filed by the Petitioner on December 10, 1959 for the purpose of supplying certain supplemental information. By letter dated December 24, 1959 (Joint Exhibit No. 3) the Respondent, subject to the publisher's right to file an appeal pursuant to the applicable
Rules of Practice, denied the application on the grounds that the publication does not have a legitimate list of subscribers and that it is designed primarily for free circulation.
The Petitioner herein filed a timely appeal from this ruling and the case was heard before the Hearing Examiner on March 3, 1960. During the progress of this hearing the Respondent moved to amend the answer so as to include the charge that the publication is designed for circulation at nominal rates within the meaning of Section 132.228 of the Postal Manual (Title 39, C.F.R. 22.2(b)(8)). This motion was granted. Both parties to the proceedings filed Proposed Findings of Fact and Conclusions of Law and supporting briefs. In his brief, Counsel for the Respondent withdrew two of the grounds set forth by him namely:
1. That the publication does not have a legitimate list of subscribers; and
2. That the publication is designed for circulation at nominal rates.
The sole issue therefore which was submitted to the Hearing Examiner for decision at that time was whether the publication here involved is designed primarily for free circulation within the meaning of the Postal Laws and Regulations.
The Initial Decision of the Hearing Examiner issued on May 24, 1960, decided this issue in favor of the Petitioner and the Respondent took a timely appeal from this Initial Decision to the Judicial Officer.
While this matter was on appeal to the Judicial Officer, the Respondent filed on July 21, 1960 a motion to reopen the hearing setting forth in said motion that since March 3, 1960 it had come to the Respondent's attention that the Petitioner had permanently discontinued the publication of SPORTS CAR GUIDE and charging that in order to be entitled to second-class mailing privileges a publication must be published at regular intervals at least four times a year and that the publication here involved no longer meets that condition and does not appear to have met that condition as of the time the original hearing was held. The Respondent further requests in the motion to reopen that the appeal of the Petitioner be dismissed as moot.
The Respondent's motion was granted and the case was reopened for the receipt of additional evidence. However, on August 4, 1960, the parties hereto filed a stipulation which obviated the necessity of a further hearing. The facts as set forth in the stipulation showed that the Petitioner published four issues of SPORTS CAR GUIDE (volume 1, number 1 through volume 1, number 4) being respectively the September 1959, the November 1959, January 1960 and March 1960 issues of the publication and that the publisher thereafter discontinued said publication.
The stipulation further provided that the attachment B which had accompanied the Respondent's motion to reopen dated July 21, 1960 (granted July 22, 1960) be admitted into evidence as joint exhibit 5.
The stipulation further set forth that both parties request the Hearing Examiner to provide for the submission by them of supplemental proposed findings of fact, conclusions of law and supporting briefs concerning the effect, if any, Joint Exhibit 5 had upon Petitioner's entitlement to receive second-class mailing privileges for the four issues published prior to the discontinuance.
The issues before the Judicial Officer on this appeal are as follows:
1. Should the Hearing Examiner's decision denying the motion to dismiss the Petition herein on account of mootness be reversed?
2. Whether or not the publication is designed primarily for free circulation within the meaning of the Postal Laws and Regulations?
This issue, number 2, was the only issue decided in the Initial Decision of the Hearing Examiner and covered in the exceptions and appeal therefrom originally filed herein before the proceedings were reopened and the Supplemental Initial Decision entered.
The pertinent provision of Title 39, United States Code, Section 4354 (formerly section 226) with which we are concerned reads as follows:
"Nothing herein contained shall be so construed as to admit to the second-class rate regular publications designed primarily for advertising purposes or for free circulation or for circulation at nominal rates."
It is necessary to determine whether or not the publication here involved is designed primarily for free circulation.
Section 132.227 of the Postal Manual provides as follows:
"Publications designed primarily for free circulation may not qualify for second-class privileges. Publications that are not circulated principally to a list of subscribers are considered to be designed for free circulation. All copies printed and circulated either by mail or by the publisher's carriers, and at the second-class pound rates or the transient rate are considered in determining whether a publication is designed for free circulation."
The Petitioner apparently contends that the phrase "designed primarily for free circulation" provides a test based primarily upon the intent of the publisher and the evidence submitted by the Petitioner at the hearing denies any intent or design on the part of the Petitioner to circulate his magazine free.
The record reveals that 163,000 copies of the Publication were printed and were disposed of as follows:
161,850 consigned to news agents with return privileges (of these 56,897 copies were sold by news agents and
104,953 returned)
328 copies distributed to paid subscribers
301 copies sent free to various addressees
10 distributed to advertisers
5 distributed as exchange copies
506 retained by the publisher.
The Petitioner contends that whether we interpret the word "circulation" to mean distribution or ultimate readership that they have complied with the law and regulations and are entitled to the second-class privileges. Thus what is really meant by the word "circulation" as it pertains to the provisions of the Postal Regulations becomes of paramount importance.
In his argument accompanying his supplemental exceptions to the Supplemental Initial Decision of the Hearing Examiner, Respondent states that there is no question but that the publication was published at stated intervals four times within a year from the date of application for second-class mail privileges. The September 1959 and November 1959 issues of the publication were published after the application of July 1, 1959 (Joint Exhibit No. 1) had been filed and before the letter of December 24, 1959 (Joint Exhibit No. 3) denying Petitioner's application for second-class permit was issued. Thereafter this appeal was taken and the magazine continued to publish for two more issues; namely, the January 1960 and the March 1960 issues. Certainly then the proper steps were taken by the Petitioner to take his appeal within the prescribed time and it is conceivable that if all expedition had been had the matter could have been heard and decided prior to the cessation of publication. Respondent, however now contends that because while the appeal was pending and before the Initial Decision of the Hearing Examiner and likewise prior to the determination of the administrative proceeding the publication had been voluntarily discontinued that the question there involved could not be decided by the Hearing Examiner and that the whole proceeding thus became moot. I cannot agree with this contention. The question being heard by the Hearing Examiner was whether or not the Respondent's action in denying second-class privileges in December of 1959 was proper upon the facts which he had before him and it seems to me clearly
apparent that the Petitioner was entitled to a determination of that question through the administrative processes.
The question of whether or not the publication is designed primarily for free circulation within the meaning of the postal laws and regulations seems to be a much more difficult one. If these four issues did comply in all respects with the law and the postal regulations covering second-class privileges particularly as they pertain to the "free circulation" provisions then they would have been entitled to second-class entry. If they failed to meet these provisions and were in fact primarily published for free circulation as that term is understood and interpreted then they would not be entitled to second-class entry and the petition should be denied.
Under the Postal Regulations "all copies printed and circulated either by mail or by the publisher's carriers and at the second-class pound rates or the transient rate are considered in determining whether a publication is designed for free circulation." We must therefore determine (1) should the 104,953 copies of the publication which were returned be included in the "consideration" as above provided and (2) should the 56,897 copies sold through newsstands be included in the "list of subscribers" to which the publication must be "circulated principally" in order to be considered in determining eligibility for second-class entry.
It does not seem to me that the bulk shipment of copies of a publication from the publisher to the distributor constitutes "circulation" as intended in Section 132.227 of the Postal Manual or in 39 U.S. Code 4354 (formerly Section 226). I agree with the Hearing Examiner that what is intended by the laws and regulations is to require these publications to reach the reading public "either by mail or by the publisher's carriers" - copies returned as unsold are not specifically included in the provisions of the statutes or regulations and I cannot find anything which would indicate such inclusion is implied.
It is my conclusion therefore that the publication "SPORTS CAR GUIDE" is not designed primarily for free circulation and that said publication conforms to the requirements of Section 132.227 of the Postal Manual and Section 4354 (formerly section 226) of Title 39, United States Code and is entitled to entry into the mails as second-class mail matter.
The Respondent's decision denying permit for second-class mail entry is reversed and this matter is remanded to the Respondent for action herein not inconsistent with this decision.