In the Matter of the Petition by MARVIN LEVIN, Publisher, SOUTHERN BEVERAGE JOURNAL, P.O. Box 561107, Miami, Florida 33156, Proposed Revocation of Second-Class Mail Privileges for "EXECUTIVE BEVERAGE JOURNAL" P.S. Docket No. 3/111 March 15, 1976 Rudolf Sobernheim Administrative Law Judge APPEARANCES: Marvin Levin, Publisher Southern Beverage Journal P. O. Box 561107 Miami, Florida 33156 for Petitioner Grayson M. Poats, Esq. Law Department U. S. Postal Service Washington, D. C. 20260 for Respondent
This is a proceeding initiated by petitioner pursuant to 39 CFR Part 954 to contest the ruling of respondent, represented by the Director, Office of Mail Classification, Rates & Classification Department, U.S. Postal Service (hereinafter sometimes referred to as the "Director") which on 19 September and 1 November 1974 revoked, subject to the outcome of this proceeding, petitioner's second-class mail privileges in respect of the "Executive Beverage Journal" (hereinafter sometimes referred to as the "Journal" or "EBJ").
The reasons for this ruling were stated by the Director in his letter of 19 September 1974 as follows (see copy att'd to Compl.):
"Pursuant to section 132.211, Postal Service Manual, only newspapers and other periodical publications may be mailed at the second-class rates of postage.
Section 132.224, Postal Service Manual, provides that second-class 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.
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 or 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 articles appearing in them, whether they be successive chapters of the same story or novel or essays upon subjects pertaining to general literature.
The above definition of a periodical is based on a Supreme Court ruling in the case Houghton v. Payne 194 U.S. 88 (1904) .
The 'Executive Beverage Journal' is not a newspaper or other periodical publication within the meaning of the postal regulations. It is nothing more than a price list which is updated on a periodic basis, with much of the material remaining the same from issue to issue. [See FTDA, P.S. Docket No. 1/167 (1973)]."
After a reply by petitioner under date of 4 October 1974, a copy of which was placed into the record as petitioner's Exhibit 2 after the hearing was closed, the Director under date of 1 November 1974 confirmed his ruling in the following language (see copy att'd to Compl.):
"...we still believe that the 'Executive Beverage Journal' does not qualify for second-class mail privileges because of the reason stated in our communication dated September 19,
1974. That is, the 'Executive Beverage Journal' is not a newspaper or periodical publication within the meaning of the postal regulations. It is nothing more than a price list which is updated on a periodic basis, with much of the material remaining the same from issue to issue."
Petitioner's complaint, docketed on 11 November 1974 asserted that on the merits petitioner was entitled to second-class mail privileges for EBJ and that the same should not be revoked. It further asserted, however, that the decisions rendered in P.S. Docket No. 1/28 (Init. Dec., 25 Oct. 1972; P.S. Dec., 8 March 1973, upheld on M. f. recon. , 20 April 1973) barred respondent from challenging petitioner's right to second-class mail privileges on any ground available in that proceeding.
Respondent in its answer restated the Director's position on the merits of the present controversy and claimed that any grounds were available to it as the basis for the proposed revocation action on which a ruling had not been made in the prior proceeding.
Simultaneously, respondent's counsel requested a continuance until 30 days after issuance of a Postal Service Decision in William R. Good, Jr. , P.S. Docket No. 2/123 (1975), involving a similar publication, styled "Patterson's California Beverage Gazetteer" (hereinafter sometimes referred to as the "Gazetteer"). This motion was granted. A Postal Service Decision in Good was not issued until October 1975 and, hence, a hearing in the instant case held only in November 1975. At that hearing both parties offered testimonial and documentary evidence. Both parties also filed post-hearing briefs and replies thereto. The matter now stands ready for initial decision.
1. Since 1971 petitioner has published EBJ as a publication in the alcoholic beverage industry.
2. EBJ is addressed to enterprises engaged in the production or distillation or in the importation, wholesaling and other modes of distribution above the retail level of alcoholic beverages, and to the executives of such companies.
3. Petitioner estimates that it currently has over 500 subscribers and that they represent a high proportion of its potential audience. In fact, any member of the public can subscribe to EBJ except for retail liquor dealers (T 36, 37). The subscription price is $25.00 per annum for domestic and $40.00 annually for foreign subscribers (T 37).
4. According to the results of a subscriber survey, made by petitioner in December 1974, about half of the ca. 200 subscribers whose answers were tabulated (Pet. Ex. 3) were located in Florida and Georgia, about 25 percent in other Southern states and another 15 percent or thereabouts in New York with the balance spread around the country.
5. Five issues of the Journal were placed in evidence as representative of petitioner's publication (March 1974, Resp. Ex. 1; May 1974, Resp. Ex. 2; August 1974, Resp. Ex. 3; November 1974, Pet. Ex. 4; June 1975, Resp. Ex. 4).
6. The March 1974 issue of EBJ is a volume of 586 pages, 8 x 11 inches in size, published monthly by Southern Beverage Journal and mailed second-class postage paid from St. Petersburg, Florida. It is divided into two parts: (a) an editorial section of 30 pages, and (b) a brand index and price list of section of 556 pages.
a. Of the 30-page editorial section fourteen full pages are filled with advertisements for alcoholic beverages. Some additional ads occupy only part of a page.
b. The editorial material proper is divided into two sections: "Features" and "Departments". The former consists of several, relatively short articles focusing, in the March 1974 issue, on cognacs and American brandies and the promotion of Kosher wine sales. The "Features" articles occupy eight pages. The "Departments" comprise seven pages of text, divided for March 1974 into:
Publisher's Page
Quotable Quotes
Remember? Ten Years Ago in SBJ
Newsreel
c. The remainder of the March 1974 issue of EBJ and the great bulk of its pages consists of brand indices and price lists for alcoholic beverages, divided into 16 areas, each of which occupies a relatively fixed number of pages. These areas in which a substantial share of the business in bourbon whiskey and other hard liquors is transacted (T 39) are:
Miami (80 pages)
Jacksonville (40 pages)
Tampa (36 pages)
Pensacola (24 pages)
New Orleans (32 pages)
Atlanta (52 pages)
Savannah (20 pages)
Albany-Columbus-Valdosta (24 pages)
Macon (20 pages)
Augusta (20 pages)
Memphis (48 pages)
Nashville (36 pages)
Chattanooga (28 pages)
Knoxville (32 pages)
South Carolina (32 pages)
Arkansas (32 pages)
d. For each area EBJ publishes the alcoholic beverage prices of companies who advertise these prices in the Southern Beverage Journal and pay as advertisers for their insertion in that publication. However, no payment is received by EBJ for publishing these price lists other than the price paid by its subscribers.
e. To use one of the smaller areas, the Pensacola brand index lists 6 firms and shows the brands they sell and notes absence of change from the prior month if that is the case. This is followed by a "reverse" index, interspersed among the price lists and noting within each class of beverage the brands traded and the retailer selling it. The price list of the six firms cover from 4 to 5 pages each. Minor advertisements and blank pages for notes also appear in these sections.
7. The subsequent issues of the EBJ follow the pattern described in some detail in Finding of Fact No. 6. Of course, the features and to some extent the departments in the editorial section change from month to month but the basic structure of the section, i . e . total length, full page ads and pages devoted to textual material, does not vary significantly. The only exception of record is the November 1974 issue of EBJ (Pet. Ex. 4) which as the holiday season issue carried a greatly expanded editorial section (total 132 pages, 58 pages of ads with three pull-outs and 13 "features" and 9 "departments").
8. In all issues of record the brand indices and price lists occupy some 550 pages with some slight variations in space allotted to the different areas (compare March 1974 (Resp. Ex. 1) with November 1974 (Pet. Ex. 4) and June 1975 (Resp. Ex. 4)). These changes, such as four pages more or less for New Orleans, do not affect the appearance, character or overall content of the publication.
9. In its letter of 4 October 1974 petitioner had collated data on changes in lines of type between issues of EBJ. Without adopting the specific figures mentioned by petitioner in his letter it is clear therefrom that changes in information received by the publisher may result in changing a substantial number of lines of type and the record also supports the conclusion that price changes, changes in personnel and changes in brands handled occur with sufficient frequency to require numerous changes and careful editing of the material from one issue to the next. The competitiveness of the alcoholic beverage industry (T 38) makes a capability for close observation of price shifts between competing brands over a period of time, covered by more than one issue, desirable, if not necessary (T 46-47). Hence, it is not surprising that some subscribers of EBJ keep at any one time more than one issue of the Journal on hand to cross-check on price and other movements (see Pet. Ex. 3, passim ).
10. The editorial section and the price lists published in EBJ are also not as unconnected as they may appear at first blush to be. The news, for instance, that a strike in the Scotch whiskey industry is brewing would be reflected in price changes made by dealers in anticipation of the effect of or in response to the strike (T 49). An editorial article on wines may lead a wholesaler to adjust his entire price and selling structure, reflected in new prices for wines reported in a later issue (T 61).
11. The subscriber survey, initiated by petitioner in December 1974 (Pet. Ex. 3), provides information on the use of EBJ by its subscribers which confirms the information provided by petitioner in his testimony and referred to in the preceding Findings of Fact or which can be gleaned from the appearance, arrangement and content of the Journal. The central content of the Journal is the price and marketing information presented in the brand index and price list sections of each issue. About half of the responding subscribers use the information found in EBJ primarily, if not solely, to gain knowledge of the competitiveness of prices and products, to compare the prices at which their products are sold in the market place and to have a basis for their own action or inaction in regard to price. A large number of other subscribers cast their answers in terms of obtaining marketing information, learning who distributes which products and only lastly of finding information on new products or marketing ideas. The wine wholesaler, mentioned in Finding of Fact No. 10, was clearly somewhat of a rara avis .
12. Based on the detailed Findings of Fact hereinbefore made and on the record as a whole I find that EBJ is a publication for and in the alcoholic beverage trade which provides valuable price and marketing information for sixteen areas in the Southeastern United States to enterprises and their executives, engaged in the alcoholic beverage business other than as retailers.
13. This trade information is presented in the form of price lists and brand indices which show the prices charged and brands dealt in by the retailers whose price lists appear in EBJ. These lists and indices constitute in substance a catalog or directory and are not presented in the form of connected texts or articles.
14. Petitioner has referred to or attempted to distinguish the Journal from other publications.
a. No findings can be made in respect of the Security Owners Guide which according to the records of the Docket Clerk of the Office of Administrative Law Judges of the U. S. Postal Service has not been the subject of any administrative appeal involving the second-class mail privileges of its publisher (Ltr Docket Clk to Pet'r, dtd 1 Dec. 1975).
b. Petitioner has referred to "Advance New Food Establishment Business Reports" which was held mailable at second-class mail rates in P.O.D. Docket No. 3/37 (1970). The copy thereof submitted for the record (Pet. Ex. 1), marked "Volume XVII - Number 20" and dated "May 16, 1975" is a one-page perforated sheet with eight consecutively numbered entries of new food enterprises in Suffolk County, New York. Each entry gives the name and location of the new enterprise, its telephone number, anticipated opening date and a reference for obtaining further information. Clearly, these items do not constitute textual material in the form of articles but might conceivably be considered a newsletter. No finding on such tangential matters need be made herein.
c. Petitioner has sought to distinguish its publication from the Gazetteer and has emphasized that the material in the Gazetteer was largely advertising material (see Init. Dec., P.S. Docket No. 2/123 (1975)). That in fact much of the material in the Gazetteer was deemed advertising while the price lists and brand indices which form the bulk of the Journal are not such is not disputed. Whether this factual differentiation between the two publications leads to a different adjudication as to their mailability as second-class matter is considered below.
15. Petitioner's initial application for second-class mail privileges was denied by the U. S. Postal Service on the grounds that an examination of the February 1971 issue of EBJ indicated "that it is designed primarily for advertising purposes and it does not constitute a periodical within the meaning of the above law" and that further examination of the February and May 1971 controlled circulation issues of the Southern Beverage Journal and the Executive Beverage Journal indicated "that the publications are essentially the same except for the names and the fact that the 'SOUTHERN BEVERAGE JOURNAL' is prepared for regional distribution" (Ltrs by Director to Pet'r, dated 19 May and 14 July 1971, att'd to Compl. in P.S. Docket No. 1/28).
16. When petitioner's appeal from the denial of its application for second-class mail privileges for EBJ came to be heard before Administrative Law Judge Lewis (retired) he discussed with respondent's counsel and petitioner the scope of the issues raised by the two letters of the Director denying petitioner's application. For purposes of this proceeding it suffices to state that nothing said on the record of the hearing of 20 October 1971 (see esp. P.S. DOcket No. 1/28, T 13-14, 18-19) amounts to an understanding or ruling that the Postal Service will not raise the so-called Houghton v. Payne objection to continued second-class mail privileges in respect of EBJ if the denial of petitioner's application therefor on the advertising and identity grounds were reversed. On these matters Administrative Law Judge Lewis concluded in his initial decision of 25 October 1972 (pp. 7, 12-13):
CONTENTIONS AND CONCLUSIONS
"1. The denial of second-class mail privileges for EBJ was based on the grounds that (a) it is designed primarily for free circulation, and (b) it is designed primarily for advertising. Both of these grounds stem from Respondent's contention that EBJ is merely another edition of SBJ by reason of the commonality of ownership and identity of content of the two publications.
x x x
CONCLUSIONS OF LAW
1. Petitioner has established by a preponderance of the evidence that its publication 'Executive Beverage Journal' is not designed primarily for advertising purposes and is not designed primarily for free circulation, in contravention of
132.226 and 132.227 of the Postal Service Manual. These being the only grounds upon which its petition for second-class mail privileges for 'Executive Beverage Journal' were denied, it follows that Petitioner is entitled to a second-class mail permit for the publication 'Executive Beverage Journal.'
2. Respondent's denial of a second-class permit for 'Executive Beverage Journal' was erroneous and is hereby reversed."
17. Respondent thereupon sought review of Judge Lewis' decision for a determination that EBJ did not meet the Houghton v. Payne standard for a periodical publication. The Judicial Officer refused, however, so to rule and, on the contrary, found that any such ground for upholding the Director's denial of petitioner's application had been abandoned in the proceeding below (P.S. Docket No. 1/28, Postal Serv. Dec., dtd 8 March 1973, pp. 7 et seq .). On motion for reconsideration the Judicial Officer conceded that the Director's letter of 19 May 1971 was ambiguous and might be construed as contended for by respondent before the Judicial Officer but found again that the Houghton v. Payne issue as a basis for denial of second-class mail privileges was not part of the proceeding before him under P.S. Docket No. 1/28.
CONCLUSIONS OF LAW
1. Petitioner's position that the record in proceeding P.S. Docket No. 1/28, commenced in September 1971 and concluded in April 1973, bars the instant proceeding is not well taken. The record in that proceeding, including the explicit findings and conclusions in the Initial and Postal Service Decisions, makes it clear that the issue of whether EBJ is a periodical publication under the rule of Houghton v. Payne , 194 U.S. 88, 96-97 (1904), was not decided in P.S. Docket No. 1/28. Nor was any agreement entered into nor did any situation develop which created as a matter of fact or law an estoppel against the Postal Service which prevents it from raising the issue in order to revoke petitioner's second-class mail privileges for EBJ.
2. Such a conclusion is also in accord with that part of the decision in Houghton v. Payne , supra , which bars the defense of estoppel against the revocation of second-class mail privileges improperly granted. The right of the Postal Service to revoke second-class mail privileges improperly granted has been enforced by the decisions of the administrative law judges and the Judicial Officer of the Postal Service (see Shepard's Citations, Inc. , P.S. Docket No. 1/88 (1974)) and must be enforced here if supported by the record.
3. At most what occurred was that the Postal Service was compelled to grant petitioner second-class mail privileges for EBJ because it failed to present properly all of the grounds for denial. If petitioner, therefore, came to enjoy such privileges for an approximate five-year period without proper entitlement the consequences fall on the Postal Service. But neither law nor justice require that the results of this procedural error be extended in perpetuity.
4. EBJ resembles in its presentation, general content and price guidance purposes the Gazetteer which the Initial and Postal Service Decisions found not to be a "periodical publication" within the meaning of the postal laws and regulations. William R. Good, Jr. , supra . Both EBJ and the Gazetteer have a small editorial section and that in EBJ is even less significant in number of pages than the Gazetteer's. Both publications devoted the great majority of their space to the publishing of price lists for alcoholic beverages and appurtenant indices. Whether these prices are wholesale and suggested retail prices primarily for the information of retailers or actual retail prices primarily for the guidance of wholesalers does not appear a material distinction. For in both cases, they are prices published in list format for assistance to the subscribers in formulating their price policies. Both publications also convey other important marketing information which can be gathered readily from the price lists and appurtenant indices. Nor is it apparent why it would make a difference whether the firms whose price lists are being published pay the publisher therefor as for advertising matter or whether the publisher receives no compensation from them. Petitioner has not shown any way in which these distinctions should or do affect the application of the governing postal laws and regulations (see PSM 132.2) and I also find none.
5. The Gazetteer case was not, however, decided on such issues. It was decided on what I have hereinabove referred to as the Houghton v. Payne issue, to wit: whether the Gazetteer was a periodical publication under PSM 132.2 and its predecessor statutes and the case law interpreting the same. The EBJ case must be decided on the same issue.
6. Nor can the answer be in doubt. Given the similarities and the absence of significant differences between EBJ and the Gazetteer, the Initial and Postal Service Decisions in the former case ( William R. Good, Jr. , supra ) govern the outcome here. EBJ is not composed to any essential extent of articles by different authors or indeed articles of any kind and is in substance a catalog or directory of alcoholic beverage prices. As such EBJ cannot be mailed at second-class postage rates. For related decisions see Florists' Transworld Delivery Association , P.S. Docket No. 1/167 (Am. P.S. Dec., dtd 17 Sept. 1974); National Auto Research Publication, Inc. , P.S. Docket No. 2/131 (1975); National Automobile Dealers Used Car Guide Company , P.S. Docket No. 2/183 (1975). As to the need for articles see also Shepard's Citations, Inc. , supra ; Board of Publications of Christian Reformed Church , P.S. Docket No. 2/101 (1975).
7. Surveys for Business, Inc. , P.O.D. Docket No. 3/37 (1970) on which petitioner relies, does not lead to an overturn of FTD , Good and other later decisions of the Judicial Officer and Administrative Law Judges of the U. S. Postal Service. As to the recognition accorded to them by the courts see Teleflora, Inc. v. U.S. Postal Service , U.S.D.C. D.C., Civil Action No. 75-228 giving summary judgment for defendant in plaintiff's action seeking to overturn the Houghton v. Payne rule as applied by the U. S. Postal Service.
8. The situation in Surveys for Business, Inc. , supra , was similar to that which arose in the first EBJ case (P.S. Docket No. 1/28). As was the case there, the Houghton v. Payne issue in Surveys for Business, Inc. , supra , was not effectively pressed by respondent and the proceeding decided on other grounds. Such a decision, while valid within its own four corners, cannot be relied upon as precedent for future cases.
9. Accordingly, the ruling of the Director was correct and petitioner's second-class mail privileges in respect of EBJ should stand revoked.