In the Matter of the Petition by ENCORE PUBLISHING COMPANY, 16500 North Park Drive, Southfield, Michigan 48075 Revocation of Second-Class Mail Privileges for "ENCORE" P.S. Docket No. 1/79February 2, 1973
William A. Duvall Chief Administrative Law Judge
APPEARANCES: David A. Kersh, Publisher 16500 North Park Drive Southfield, Michigan 48075 for the Petitioner Arthur S. Cahn, Esq. Law Department United States Postal Service Washington, D.C. 20260, for the Respondent
By letter dated December 28, 1971, the Manager, Mail Classification Division, United States Postal Service (Respondent), advised Encore Publishing Company, 16500 North Park Drive, Southfield, Michigan (Petitioner) that it was proposed to revoke the second-class mail privileges theretofore in effect in regard to the publication "Encore."
The basis for the proposed revocation of second-class mail privileges was the statement that:
"It appears that the publication 'Encore' is owned or controlled by Mr. David A. Kersh and/or the Metro Club and conducted as an auxiliary to and essentially for the advancement of the main business of Mr. Kersh and/or the Metro Club, Inc."
In the notice it was also stated, in substance, that in addition to the foregoing deficiency, "Encore" failed to comply with 39 U.S. Code 4351, 4354 and section 132.22 of the Postal Manual in that it does not constitute a periodical publication within the meaning of postal laws and regulations.
Petitioner made a further presentation to Respondent by letter of February 4, 1972, but that presentation did not persuade Respondent to change his views. Thus, on April 3, 1972, Respondent wrote to Petitioner reaffirming the proposal to revoke the second-class mail privileges in effect for "Encore"1/ and advising Petitioner that the proposed revocation would become final within 15 days unless Petitioner should take an appeal. A timely appeal was filed.
The matter came on for hearing in Detroit, Michigan, on June 30, 1972. The Petitioner was represented by its publisher, Mr. David A. Kersh, who testified in Petitioner's behalf and who cross-examined Respondent's witness.
At the hearing the following exhibits were received in evidence:
1. Letter dated February 4, 1972, on letterhead of METRO, addressed to the Respondent, signed "David A. Kersh" as "Publisher";
2. POD Form 3526 (May 1968 ed.), "Statement of Ownership, Management and Circulation," dated September 30, 1970, which indicates that David A. Kersh, is the owner and publisher of "Encore";
3. POD Form 3501 (Feb. 1967 ed.), "Application for Second-Class Mail Privileges" dated September 16, 1969, which indicates, among other things, that 19,500 subscriptions had been received by the publisher at the full advertised subscription price directly from the persons to whom the publication is sent. It is further stated on this form that these subscriptions were obtained "After the purchase of a publication entitled Metro Passbook from outside groups or individuals. The customer must detach and send a coupon to the publisher in order to receive 'Encore.' The subscription price of $1.00 is included in the original purchase." On this form it is also shown that the frequency of issue of "encore" is March, May, July, and September; 4, 5 and 6. These are identified, respectively, as Volume 4, Winter 1971; Vol. 4, No. 2, Summer, 1971; and Spring 1971 vol. 4 no. 1 issues of "Encore";
7. A 20-page (including front and back covers) printed piece designated a complimentary issue of The Moneybook Buyers Guide (Vol. 4) copyright 1969, 1970, 1971 by the Metro Club.
1. The National Jewish Monthly, June, 1972 issue.
2. Prevention, The Magazine for Better Health, March, 1972, issue.
3. The Moneybook, Summer 1972 issue, copyright 1971, 72 by the Moneybook, Inc.
4. Vol. 2, No. 3, August 1967 issue of "Enter- tainment 67," a Sports Unlimited Newsletter, bearing 2nd-class mail indicia and indicating that it is published 4 times a year by Sports Unlimited, Inc., 405 E. Northland Tower East, Southfield, Michigan 48076. Consideration will first be given to Petitioner's case, as related by its witness and counsel Mr. Kersh. Mr. Kersh is the principal stockholder of Metro Club, the business of which is the sale, principally through religious, civic and social clubs, of a Metro Passbook. This booklet consists of coupons which entitle the holder to receive without cost certain items when he pays the full price for an identical item such as a dinner, a theatre ticket, a ticket to a concert or a sports event and the like. Depending on the time of year, the number of employees of Metro number between 10 to 20 persons. Mr. Kersh was most vague about his relationship to the publication "Encore," but Respondent's Exhibits 1, 2, 3 and 4 indicate most strongly and persuasively that Mr. Kersh is both owner and publisher of "Encore." "Encore" also carries coupons which entitle the subscriber to certain discounts, but most restaurant discounts appear in the Metro Passbook. "Encore" has a staff of three people.
There are approximately 69,000 subscribers to "Encore" of whom approximately 20,000 are holders of Metro Passbooks. The subscription price to "Encore" is $2.00 per year and there are varying fees for membership in the Metro Club, including $6.50 when one pays the $2.00 subscription price to "Encore," to $17.50 when a single, annual membership is purchased.
In addition to the Passbook and Encore enterprises, Mr. Kersh is engaged in direct mail, carpet and travel businesses. Advertise- ments of the Society of Gourmets appear in various issues of "Encore," but Mr. Kersh testified that he has no connection with the said Society except that "Encore" accepts its ads and Mr. Kersh, through his travel business, bids on the furnishing of land transportation for travel sponsored by the Society. Mr. Kersh is also a member of the Society of Gourmets but he holds no office in the Society.
So far as the record shows, Mr. Kersh is not an officer or owner of any other organization that advertises in "Encore."
Mr. Kersh declined to furnish to Respondent the list of subscribers to "Encore" but he did offer to make the list available at a mutually agreeable time at his office.
Mr. Theodore W. Troy, Respondent's witness, described the publication as containing a number of advertisements relating to restaurants, dry cleaners and different retail organizations and announcing the discounts given by these establishments. It contains information on the Metro Club and it updates the tickets or coupons in the Metro Passbook, specifying the organizations that have changed management or gone out of business since the Passbook was originally published. The publication also contains a feature article about Metro by "Mary of Metro," an advertisement for the Society of Gourmets, membership applications and membership information about Metro Club and subscription forms for "Encore." On one page of Respondent's Exhibit 4, members of Metro are asked to report any difficulties encountered with member establishments. In addition to all of the foregoing there are short articles on a variety of subjects.
Respondent's witness recognized that a person could subscribe to "Encore" without being a member of Metro Club but he was of the view, disputed by Mr. Kersh, that the preponderant proportion of subscribers are members and that the publication appears to have no value to anyone who is not a member of Metro Club. It was the witness's belief that the thrust of the entire publication is to promote the business interest of Mr. Kersh's business organizations.
After considering the testimony of the witnesses for both parties, the 3 issues of "Encore" must be examined. The publication is approximately 5 1/2 inches by 8 1/2 inches and the number of pages varies, with the Spring, 1971, issue containing 32 pages; the Summer, 1971, issue - 16 pages; and the Winter, 1971 issue - 32 pages.
The Spring issue (Resp. Ex. 6) has at least 6 pages devoted exclusively to the Metro Club, and except for certain articles and space devoted to matters of interest only to Metro Club members, contains nothing but advertisements of travel offers or of business establishments. A good many of the advertisements indicate that the discounts being offered are available to "Metro Members only."
The Summer issue (Resp. Ex. 5) contains one one-page guest editorial and the remainder is made up of advertisements of travel, local business establishments or Metro Club information. In this issue, the overwhelming majority of the advertisements of local businesses contain a statement that the price advantages being offered are available to "Metro Members only."
The Winter issue (Resp. Ex. 4) is somewhat different than the two previous issues. The differences are:
1. The inclusion of a greater number (9) of short articles on different subjects by various authors.
2. A decrease in the amount of copy devoted to Metro Club; and
3. A sharp reduction in the number of advertise- ments which carry a legend indicating that the price advantages therein offered are available only to Metro Club members.
While it is possible, though it is by no means certain, that the publisher has initiated a trend toward the publishing of material that is less centered upon the affairs and progress of the Metro Club, the decision in this proceeding must be based upon the totality of the evidence adduced at the hearing.
Upon full and careful consideration of all the available evidence, the following findings of fact are made:
1. David A. Kersh is the principal stockholder, or owner, of Metro Club and Encore Publishing Company, which latter concern publishes "Encore."
2. "Encore" is published primarily to further the business interest of the Metro Club, that is the sale of the Metro Passbook.
3. "Encore" is published primarily for advertising purposes.
1. "Encore" is designed primarily for advertising purposes within the meaning of 39 U.S. Code 4354(c).
2. "Encore" does not conform to the requirements of postal laws and regulations governing eligibility for obtaining or retaining second-class mail permits.
3. The decision by Respondent to revoke the second-class mail privileges previously accorded to "Encore" was correct and that decision is affirmed.
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