In the Matter of the Application by SURVEYS FOR BUSINESS, INC., 10 East 40th Street, New York, New York 10016, for Second-Class Mail Privileges POST OFFICE DEPARTMENT, DIVISION OF HEARING EXAMINERS, WASHINGTON, D.C. 20260, P.O.D. Docket No. 3/37 October 9, 1970 William A. Duvall Chief Hearing Examiner APPEARANCES: Peter J. Strauss, Esq. Moldover, Hauser & Strauss 110 East 42nd Street New York, New York 10017 for the Petitioner Samuel S. Horn, Esq. Office of the General Counsel Post Office Department Washington, D. C. 20260 for the Respondent
This proceeding involves an appeal by Surveys For Business, Inc. (Petitioner) from the decision of the Director, Office of Mail Classification, Bureau of Finance and Administration of the Post Office Department (Respondent), denying Petitioner's application for second-class mail privileges for the publications "Advance Business Reports" (hereinafter sometimes referred to as the publications). Said denial was contained in a letter from Respondent dated March 27, 1970, a copy of which is attached hereto as Appendix A. In substance, the denial was predicated upon two findings: first, that Petitioner's publications are not "periodical publications" within the meaning of sections 4351 and 4354 of Title 39, United States Code, and section 132.22 of the Postal Manual; and second, that "Advance Business Reports" are "designed primarily for advertising purposes."
The first provision of law cited by Respondent is 39 U. S. Code 4351 which reads as follows:
" 4351. Definition
Second class mail embraces newspapers and other periodical publications when entered and mailed in accordance with sections 4352-4357 of this title."
The pertinent portion of 39 U. S. Code 4354 reads as follows:
" 4354. Conditions for entry of publications
(a) Generally a mailable periodical publication is entitled to be entered and mailed as second class mail if it--
(1) is regularly issued at stated intervals as frequently as four times a year and bears a date of issue and is numbered consecutively;
(2) is issued from a known office of publication;
(3) is formed of printed sheets;
(4) is originated and published for the dissemination of information of a public character, or devoted to literature, the sciences, arts, or a special industry; and
(5) has a legitimate list of subscribers.
* * * * * * *
(c) A periodical publication designed primarily for advertising purposes or for free circulation or for circulation at nominal rates is not entitled to be admitted as second class mail under this section."
The regulations issued and administered by the Respondent are paraphrases or elaborations of the statutes, and the pertinent sections of the Postal Manual are the following:
"132.224 Contents. Publications must be originated and published for the purpose of disseminating information of a public character, or they must be devoted to literature, the sciences, art, or some special industry.
* * * * * * *
"132.226 Advertising Publications. Publications designed primarily for advertising purposes may not qualify for second-class privileges. They include:
a. Those having advertising in excess of 75 percent in more than one-half of their issues during any 12-month period.
b. Those owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of the main business or calling of those who own or control them.
c. Those that consist principally of advertising and editorial write-ups of the advertisers.
d. Those that consist principally of advertising and that have only a token list of subscribers, the circulation being mainly free.
e. Those that have only a token list of subscribers and that print advertisements free for advertisers who pay for copies to be sent to a list of persons furnished by the advertisers.
f. Those published under a license from individuals or institutions and that feature other businesses of the licensor."
In reality there are two publications issued by Petitioner. Although they bear the same title, "Advance Business Reports," the publications deal with different types of businesses -- food and non-food enterprises. The first of them (on white paper) contains notifications concerning "Relocation and Expansion" of existing, non-food, manufacturing business offices and plants. This publication is issued on Wednesdays and Fridays, with a supplement (on blue paper), attached to the Friday issue, containing notifications of openings of new, retail, non-food, business offices and plants.
The second publication deals with business activities in the food field and contains notifications of (1) anticipated openings (on yellow paper); (2) changes in the status of ownership or management (on green paper); and (3) anticipated or pending changes in management (on pink paper). This publication is issued on Friday of each week.
In regard to each publication, there is an edition for each of the boroughs of greater New York, and for the Advance Business Reports on food establishments there is, in addition, a Westchester edition. There is an elaborate schedule of subscription rates to each publication for each edition, depending upon the number of years a subscription is to run and various reduced rates for subscriptions to different combinations of editions. An indication of the subscription rates is made by pointing out that a year's subscription rate for each of the two publications is $1,440, based upon subscription to all editions of each publication.
A subscription is taken to either of the publications by executing an agreement whereby the subscriber "engages Surveys For Business for the term of one year *** to report such information as may be obtained and deemed material in ***" designated localities and in regard to (1) relocation or expansion of executive offices, wholesalers, manufacturers or industrial firms, (2) new food establishments, or (3) formation of new businesses. The subscriber also agrees, among other things, to treat the information supplied by Petitioner as "CONFIDENTIAL INFORMATION for use only in the undersigned's [subscriber's] business, but in no event to be used or permitted to be used in any manner in competition with Surveys For Business, directly or indirectly." (Complete details regarding conditions and rates of subscriptions are found in Joint Exhibits 1, 2 and 3.)
Physically, the publications are comprised of sheets of paper 14" x 8 1/2" in size and in the various colors indicated above. On the top two inches across the front page there appears the name of the publication; the type of the publication, whether concerning food or non-food establishments; the volume, number and date of the issue; the designation of the locality covered by the edition; and much of the data generally found in the mastheads of other publications. Other pages of each publication carry in the top two-inch strip the name of the publication and the identification of the types of businesses reported on, and they may or may not carry the masthead information. The remaining 12-inch length of each page is divided into blocks 4 1/2" x 3" in size containing the name of a business and information appropriate to the character of the report, such as ownership, planned moves, expansions, openings and the like. There are 8 such blocks on each page, except that the last page of each publication may contain some blank blocks. Each block is surrounded on 3 sides with partial perforations so that each may be separated and retained for further reference, if desired. On all blocks, there are the following statements:
"Another Report From
SURVEYS FOR BUSINESS, INC.
10 E. 40th St., N.Y.C. OR 9-6855
Use Granted by Contract Only"
and
"Copyright Surveys for Business, Inc., 1970"
Respondent urges that Petitioner's publications be declared not entitled to second-class entry because they are not "periodical publications" as that term has been defined and applied by the Courts and in postal laws, regulations and practice, and because they are designed primarily for advertising purposes. In support of Respondent's position, it is argued (1) that the publications lack continuity; (2) that the publications are not originated and published for the dissemination of information of a public character or devoted to some special industry; and (3) the rule of contemporaneous construction does not require the granting of Petitioner's application. These arguments will be discussed in the order in which they are stated.
In considering the arguments made on behalf of Respondent, it is well to look at the purposes intended to be served by the publications. The publications are intended to provide subscribers, including banks, realtors, building supplies dealers, contractors and city and state governments, information of various relocation trends and new business openings in the New York City area. (Tr. 4) They are used as marketing and sales aid information. For example, by having news of firms who are moving to or opening in the area they serve, banks may solicit such firms and offer them various financial and banking services. As another example, if a firm is looking for a site in a particular area, realtors in that area may call upon the firm as a prospect. Government agencies can become aware of business and employment opportunities and trends in different areas. In sum, the subscribers utilize the information in the publication in order (1) to attempt to provide a service or sell a product to the firms whose names appear in the publication or (2) for the benefit of employers and labor. (Tr. 36, 37, 52, App. Ex. 4)
In the course of providing information of the type described, some issues contain notification that a firm is looking for space in a particular area at some future time. A subsequent issue may contain a notice that the firm previously reported on anticipates moving or did move on a certain date to a specific location. (App. Exs. 5, 6, 7, and 8)
In support of its position on this point, Respondent cites Houghton v. Payne , 194 U.S. 88 (1904) wherein it was said:
"A periodical, as ordinarily understood, is a publication appearing at stated intervals, each number of which contains a variety of original articles by different authors, devoted either to general literature of some special branch of learning or to a special class of subjects. Ordinarily, each number is incomplete in itself, and indicates a relation with prior or subsequent numbers of the same series. It implies a continuity of literary character, a connection between the different numbers of the series in the nature of the articles appearing in them, whether they be successive chapters of the same story or novels or essays upon subjects pertaining to general literature."
In Smith v. Hitchcock , 226 U.S. 53, there are the following definitions, Mr. Justice Holmes speaking:
"The noun periodical, according to the nice shade of meaning given to it by popular speech, conveys at least a suggestion, if not a promise, of matters on a variety of topics, and certainly implies that no single number is contemplated as forming a book by itself. ***Without attempting a definition we may say that generally a printed publication is a book when its contents are complete in themselves, deal with a single subject, betray no need for continuation, and, perhaps, have an appreciable size. There may be exceptions as there are other instances of books."
In view of the purposes for which the publications now under consideration are published, and in view of their contents as above described, and as indicated by the sample copies in evidence, there is a connection between different numbers of the series and there are (1) a lack of completeness and (2) a need for continuation and addition to the information contained in different issues. In short, there is continuity in the publications and the evidence fails to support Respondent's argument on this point.
Respondent's second argument raises the question whether Petitioner's publications are originated and published for the dissemination of information of a public character or devoted to some special industry. Consideration will first be given to the "information of a public character" phrase of this argument.
Many of the notices appearing in the publications report construction of new buildings, modification of old buildings and opening of new businesses. For each of these activities, it is necessary to obtain a building permit or to obtain a license to engage in the particular business. All of these authorizations are matters of public record and, as such, come well within the broad scope of the term "information of a public character." What the Petitioner does is to get information from public and private sources and print it in the publications so that a great body of this information is available from one source.
Respondent states that the fact that the subscribers must agree to keep the published information confidential indicates that the notices published are not information of a public character. Respondent also assigns much significance to the fact that there are no newsstand sales of the publications.
Petitioner's President and three reporters gather the information, assemble it, check it and prepare it for publication. Petitioner will sell the information to anyone who is willing and able to subscribe (Tr. 49), but Petitioner is unwilling to have the information contained in the publications freely copied by persons who might find the publications on newsstands. Among other reasons, Petitioner's President feels that placing copies on newsstands for public display would not be fair to his regular subscribers who pay substantial fees for the publications. (Tr. 41) As an aside, it might be suggested that it is doubtful whether newsstand sales of these publications, in view of their high degree of specialization, would be sufficient to pay distribution expenses. There are about 375 regular subscribers.
On the question of whether the publications are devoted to "a special industry," it is patent that these publications are designed to serve the construction, realty, office and building supply, and related businesses in the New York City metropolitan area. (Tr. 50, 53, List of Subscribers, App. Ex. 4)
The evidence in this proceeding is insufficient to support Respondent's position on the second of Respondent's arguments.
There remains the question of whether these publications are "designed primarily for advertising purposes." At the time of the issuance of the notice of denial of Petitioner's application and continuing through most of the hearing, it was Respondent's view, and Respondent so notified Petitioner, that the publications are designed primarily to advertise those firms the names of which appear in the publications. Paragraph 7 of the notice of proposed denial of the application contains the following, among other, language:
"***The primary design of he publication is to advertise and promote the business interest of the organizations and concerns shown in copies of the respective issues and the matter appearing therein is inserted under arrangement with the advertisers. The issues are devoted entirely to such advertising matter. ***" (See, also, the testimony at pp. 62, 67, 68 and 70)
The mistake in Respondent's position expressed above is clearly demonstrated by uncontroverted testimony (1) that Petitioner has no direct contact with the firms listed in the publications, except through verification, by telephone, of information received concerning such firms (Tr. 17); (2) that Petitioner receives no compensation whatever from the firms listed in the publications (Tr. 17-18); and (3) that the firms whose names are listed are not required to be subscribers to the publications and, in fact, few, if any, of them are (Tr. 51).
This uncontroverted testimony could, and perhaps should, put an end to this question of whether the publication is designed primarily for advertising purposes. The matter could properly be said to be put at rest because the basis on which Respondent proposed to act, and the basis, in part, on which the Petitioner was given notice, has been demonstrated to be based on mistaken assumptions.
Respondent's Counsel, however, in his brief, presented a new and interesting theory in support of Respondent's allegation that the publications under consideration are designed primarily for advertising purposes. Respondent argues in his brief that, since Petitioner's subscribers use the information in the publications as leads to firms to whom they will attempt to sell goods, property or services, the publications are designed primarily for the advertising purposes of the subscribers. 1/
The problem of determining the admissibility to the mails as second-class matter of publications said to be designed primarily for advertising purposes has had a long development. The legislative history of this provision of the law governing second-class mail was explored at length and set forth, in part, as Appendix A to the Initial Decision in the Matter of the Petition of Conover-Mast Publications, Inc. , H.E. Docket No. 5/173, (April 8, 1958; aff'd. by Final Departmental Decision, May 19, 1958). 2/
In an early comment, on March 7, 1877, the Assistant Attorney General for the Post Office Department, when asked for the definition of a "regular publication designed primarily for advertising purposes" indicated the magnitude of the problem when he said: "This question is invested with almost insuperable difficulties." (1 Ops. A.A.G., P.O.D. 400). He then proceeded to analyze the terms "designed" and "primarily." He, next, proposed the following rule:
"***A paper principally or very largely devoted to a particular interest, as for instance, the collection of claims against the government, or the sale of a particular article of manufacture, or the development of a particular section of country, edited and controlled, in the first instance, at the seat of government by a claim agent; or, in the second instance, by the proprietor of the article advertised in the columns; or, in the third instance, by a real-estate agent in the section of country advertised or proposed to be developed, such a paper may very safely be held to be within the rule.***"
Three months later, on June 7, 1877, the Acting Assistant Attorney General for the Post Office Department said in response to an inquiry from the then First Assistant Postmaster General:
"***There is no ambiguity in the term 'regular publications designed primarily for advertising purposes' as employed in the aforesaid section, but the question of whether a given publication is within the terms employed, being a question of fact rather than law, is not as easily answered.***"
After discussing the matter further, he concluded by saying:
"***As a summary of these views, I would advise you that publications which are regularly issued by single individuals, or by firms, or by combinations of individuals or firms engaged in trade, the main object of which is the prosecution of the business interest of the owners or publishers of the same, whether the same be done openly and without disguise, or whether it be done by conveying information relative to the business of a certain class of the general public, as well as such publications as are confined to general purposes of advertising, are such publications as are designated by the thirteenth [15th] section of the act of 1876.
"The question in all cases is a question of intent." (1 Ops. A.A.G., P.O.D. 313)
One final quotation from the past has particular applicability to the question now being considered. On March 25, 1879, the Postmaster General requested the opinion of the Attorney General of the United States as to the meaning of the phrase "regular publication designed primarily for advertising purposes." This was a lengthy letter outlining the history of legislation containing this language and describing some of the difficulties of administering it. (Postmaster General's Letterbook No. 12 (March 4, 1878-October 31, 1879), Industrial Records Branch, National Archives and Records Service, General Services Administration.)
In responding to the Postmaster General's inquiry, the Attorney General, on April 15, 1879, said, among other things, the following:
"***I fear that I shall not be able to define these terms (which are in themselves simple and intelligible) so as to aid you in the decision of the various questions which are before you as to the character of individual publications.
"The difficulties presented seem to me to be entirely as to a question of fact, with whom the Postmaster-General must necessarily deal through the information that he receives in each particular case, and those general rules which he may think valuable in deciding such a question.
* * * * * * * * *
"The words of the proviso [concerning advertising, free circulation, and nominal rate circulation] are hardly susceptible of non-construction on account of their simplicity. The only phrase that it seems necessary to comment upon is 'designed primarily for advertising purposes.' In this connection I think this phrase must be deemed to mean 'chiefly or principally intended for advertising purposes.' The word 'primarily' is intended to indicate the chief or principal object of the publication, and not its first object in any sense of time. The use of the phrase as applied to a publication means one principally intended for advertising purposes, and, by fair inference, not one the design or intention of which is that it should be used incidentally for advertising purposes .***" (16 Ops. A.G. 303) (Emphasis supplied)
The evidence in the instant proceeding is persuasive to the point of being conclusive (1) that the publications "Advance Business Reports" are not, in and of themselves, designed to advertise (a) the publisher, (b) the persons and firms listed therein, or (c) the subscribers thereto; and (2) that if the publications are used as devices by the subscribers to determine the audience at which the subscribers' sales efforts, including, possibly, advertising material, are to be directed, that use is an incidental one and it is not the primary use or purpose of the publications themselves. Therefore, while the argument put forward on this point by Respondent is ingenious, it lacks support in the legislative history of the governing statutes and in the record of this proceeding. Respondent's interpretation would give the statute a reach far exceeding that which it was intended to have.
There was introduced as Appellant's Exhibit 9 in this proceeding a copy of the Dodge Bulletin, a publication of F. W. Dodge Company, a Division of McGraw-Hill, Inc., 330 West 42nd Street, New York, N.Y. 10006. This publication is issued daily except Saturdays, Sundays and holidays, and it is published in five separate editions, one, each, for five geographical areas in the New York City area and Northern New Jersey. The subscription rates are roughly comparable to those of Petitioner's publications and reduced rates are available for combined subscriptions, as in the case of Petitioner's publications. Little is known of the makeup of the subscription list of the Dodge Bulletin, but, upon examination, the information contained therein, and the manner of presentation of that information, are markedly similar to the style and content of Petitioner's publications. In fact, Petitioner's President stated that the publications of both concerns are competitive in certain areas of activity and that there is a certain overlap of the information contained in the Dodge Bulletin and in Advance Business Reports. The most striking difference between the publications of the two concerns is that the Dodge Bulletin has second-class mail entry, while Advance Business Reports, of course, do not.
Respondent suggests "the possibility that neither [the Dodge Bulletin nor Advance Business Reports] is entitled to entry." The import of Respondent's suggestion is that a mistake may have been made in granting second-class mail entry to the Dodge Bulletin and that the Department is not bound, by application of the rule of stare decisis , to compound the error by erroneously granting second-class entry to Petitioner's similar publications.
It is true that it has been recognized that administrative agencies are not necessarily bound by their former determinations ( State Airlines v. C.A.B. , 174 F.2d 510 (1949); 84 U.S. App. D.C. 374; rev'd. on other grounds 338 U.S. 572), but some foundation should be laid for the change in policy. In New Castle County Airport Commission v. C.A.B. , 371 F.2d 733 (1966), Judge Leventhal, speaking for the United States Court of Appeals for the District of Columbia, expressed the thought succinctly when he said:
"***An administrative agency concerned with furtherance of the public interest is not bound to rigid adherence to precedent. (Citing cases in footnote) It may switch rather than fight the lessons of experience. An agency reversing its course should supply an opinion or analysis indicating that the standard is being changed and not ignored, and assuring that it is faithful and not indifferent to the need for adherence to standards. (Citing cases in footnote.) ***"
Applying the foregoing remarks to the instant case, if error was made in granting second-class entry to the Dodge Bulletin, no such showing has been made and there is no basis in this record for a finding to that effect.
1. Advance Business Reports are periodical publications as evidenced by the facts, among others, that (a) they disseminate information of a public character, and (b) they are devoted to a special industry.
2. Advance Business Reports are not designed primarily for advertising purposes as contemplated by the governing statutes and regulations.
3. The proposed denial of second-class mail entry for Advance Business Reports was based on a misapprehension of the facts concerning the nature of the publication.
1. Advance Business Reports meet the requirements of 39 U. S. Code 4351 and 4354 and the applicable requirements of postal regulations for second-class mail matter.
2. The publications, Advance Business Reports, are entitled to entry into the mails as second-class matter.
It is recommended that second-class permits be issued to Petitioner for the publications Advance Business Reports.
Throughout this decision, when reference has been made to Advance Business Reports, the reference has been in the plural. The Recommendation above, for example, is that "permits" be issued to Advance Business Reports.
The reason for the use of the plural is that various factors support the idea that there are two publications rather than one. This possibility was even alluded to obliquely by Petitioner's Counsel (Tr. 26). For example, one publication deals primarily with manufacturing industries while the other deals principally with food industries. There are separate subscriptions to the publications and it is not unlikely that each publication appeals to a slightly different readership. This matter was not an issue in the proceeding, so that if this decision is unappealed or if it is sustained on appeal, this comment is not necessarily binding upon the parties. However, consideration of this case in its entirety leads persuasively to the conclusion that two publications are involved. Accordingly, two applications for entry, should be made and granted.
The entire record in this proceeding has been fully considered. Proposed findings of fact, conclusions of law, and supporting arguments, including the cases cited, submitted by the parties have been thoroughly weighed. Those proposed findings and conclusions are adopted to the extent herein indicated. Otherwise, such proposed findings and conclusions are denied for reasons given or because they are not supported by the evidence or because of their immateriality.
1/ Since this theory was only hinted at in the hearing and was not fully developed until Respondent's Counsel prepared and submitted his brief, this case could be continued in order to give Petitioner opportunity to prepare its defense to this assertion. However, in order to avoid undue delay, and in view of the disposition made of this lately-made allegation, it was deemed preferable to proceed to decision on the present state of the record.
2/ That Appendix will not be included here, but reference is made to it and some excerpts will be quoted from it, with citations to their sources.