In the Matter of the Petition Against ) May 20, 1976 ) UNITED BUSINESS REGISTER ) 1255 Post Street ) Suite 1023 ) ) at ) P.S. Docket No. 4/124 ) San Francisco, California 94109 ) ) and ) ) UNITED BUSINESS REGISTER ) 1255 Post Street ) Suite 609 ) ) at ) ) San Francisco, California 94109 ) APPEARANCES FOR PETITIONER: Daniel S. Greenberg, Esq. Law Department United States Postal Service Washington, D.C. APPEARANCES FOR RESPONDENT: Jerrold M. Ladar, Esq. San Francisco, California Lussier, Edward F.
Under date of November 21, 1975, the General Counsel of the Postal Service filed a Complaint alleging that United Business Register, 1255 Post Street Suite 1023, San Francisco, California (hereinafter Respondent), was engaged in a scheme or device for obtaining money or property through the mail by means of false representations in violation of 39 U.S. Code § 3005. The Complaint alleged that Respondent sent invoices to business addressees for advertising services which had not been authorized by the addressee. Specifically the Complaint alleged in paragraph IV--
"By means of said invoices and 'computerized' cards, or other material similar thereto, Respondent represents in substance and effect:
A. that the addressee thereof has a bona fide contractual indebtedness to Respondent for advertising services;
B. that an agent or employee of the addressee has knowingly approved the placement of the advertisement;
C. that an agent or employee of the addressee has knowingly authorized Respondent to bill the addressee for the services."
As a result of negotiations between the parties, Respondent signed a Consent Agreement on January 20, 1976, and the proceedings were indefinitely suspended. Under the terms of the Consent Agreement Respondent agreed that the use of the promotional activities and representations alleged in the Complaint had been and would be permanently discontinued and would not be resumed directly or indirectly under any names or addresses or through any corporate or other device. The Consent Agreement also provided that upon the filing of a petition alleging breach thereof the Judicial Officer would be authorized to issue a mail detention order pending final resolution of the issue concerning the alleged breach of the Agreement.
Under date of March 4, 1976, the General Counsel of the Postal Service (hereinafter Petitioner) filed a Petition for a mail stop order based upon breach of the Consent Agreement and attached thereto two invoices from Respondent at the same address, although a different suite number, together with affidavits from the named representatives of firms to whom these invoices had been sent attesting to the fact that their firms had never done business with Respondent and had not requested the advertisements.
A mail detention order in accordance with the Consent Agreement was issued and Respondent was given the opportunity to file a reply to the Petition. Respondent's reply admitted sending out the two invoices but denied that Respondent was engaged in a scheme or device for obtaining money or property by means of false representation, that it falsely represented that the addressees had a bona fide contractual indebtedness, that no approval of sending the solicitation occurred, and that the solicitation was identical to any previously alleged misrepresentation. Respondent attached two affidavits in support of its reply alleging these stated that the person named in the "Verbal Approval" portion of the invoice had been contacted prior to the issuance of the invoice and had "requested" that the solicitation be made. In addition to containing arguments on the merits of its position Respondent asked for an oral hearing on the matter and asked that this hearing be held in California.
The undersigned, after reviewing the above-mentioned documents, issued an order pointing out that the attached affidavits did not comport to the allegation in Respondent's reply since the affiants merely state that telephone contact was made and do not attest to the receipt of approval or request to place the advertisement. Respondent was, therefore, directed to furnish affidavits from its witnesses within a given time which would support its request for an oral hearing. After an extension of time Respondent filed a supplemental response "in lieu of further affidavit." The supplemental response was a general denial of any breach of the Consent Agreement. No reason was given for refusal to comply with the order. Petitioner thereafter filed a reply to Respondent's request for oral hearing objecting thereto and contending that the failure to comply with the Judicial Officer's order justified the inference that the failure is intentional and that such evidence does not exist, citing Sims v. S.E.C., 293 F.2d 78 (2d Cir. 1961), cert. denied, 368 U.S. 968.
By order dated April 16, 1976, the undersigned put the following procedure into effect:
1. Respondent was given 10 days from receipt of the order to supplement the record with affidavits bearing upon the factual issues and/or to file with the Docket Clerk written interrogatories to be served on the Petitioner's affiants.
2. If such affidavits and/or interrogatories were filed within the stated time Petitioner was also to be given 10 days in which to file additional affidavits and/or cross-interrogatories, after which a time would be set for prompt filing of written briefs.
3. If Respondent did not file affidavits and/or interrogatories within the time stated May 14, 1976, was set as the date for filing simultaneous Briefs and the Petition was to be decided on the basis of the record as then constituted.
Respondent has not filed affidavits or written interrogatories. It has not filed a brief. In effect Respondent has ignored the order completely. Petitioner has filed a brief in support of its Petition, setting out in some detail the history of this matter. As specified in my order of April 16, 1976, the Petition is now ready for decision on the record as presently constituted.
A copy of the invoice which was attached to the original Complaint in these proceedings is appended hereto for ready reference as Appendix A. Also attached hereto as Appendix B is a copy of one of the invoices that was attached to the Petition alleging breach of the Consent Agreement. It can readily be seen that except for the change of the office suite number of United Business Register and the addition of the word "Verbally" immediately preceding the words "Approved by" these invoices are identical.
Although Respondent has not filed a brief in the matter, its original reply to the Petition sets forth certain contentions, the first of which, mentioned above, is that the person named in the verbal approval portion of the invoice was in fact contacted prior to the issuance of the invoice and requested that the advertisement be placed. Although the evidence of record is consistent with the fact of a telephone contact with the companies involved, the affidavits of the two individuals who were named in the invoices make it crystal clear that no approval for the advertising was given. While unnecessary to support this conclusion, Respondent's failure to have its affiants expand their affidavits on this crucial point gives rise to a reasonable inference that they were unwilling or unable to do so. Likewise Respondent's failure to take advantage of filing interrogatories to be served on Petitioner's affiants leaves those affidavits standing unchallenged in proof. On the basis of this record the evidence establishes two situations wherein the company receiving the invoice, identical for all practical purposes to that used by Respondent in the promotion covered by the Consent Agreement, did not authorize the advertisement referenced therein. Petitioner has the burden of proof in showing that a breach of the Consent Agreement has taken place. In this case it has done so.
Respondent's alternate argument in its reply to the Petition is to contend that the invoice is "simply an offer to make a contract previously discussed between the parties." The fatal flaw in this line of reasoning is that it renders the Consent Agreement meaningless. It is obvious from a reading of the representations alleged to be false in the Complaint, and the attached documents by which the alleged scheme in violation of 39 U.S. Code § 3005 was being carried out, that by virtue of the Consent Agreement Respondent agreed to cease sending such invoices in the absence of a bona fide contractual indebtedness or approval for placement by the company being invoiced. This it has not done. In this connection the following observations contained in my order of April 16 are appropriate:
"In accepting the Consent Agreement Complainant permitted an indefinite suspension of the false representation proceedings then pending against Respondent and Respondent was relieved of the onus of defense and possibility of a mail stop order being issued against it as a result of the continuation of those proceedings. In return it made certain commitments embodied in the Consent Agreement waiving in effect the procedure normally followed in such cases absent a Consent Agreement. See American Image Corp. v. USPS, 370 F.Supp. 964. aff'd 504 F.2d 1397 (1974); United States Bio Genics Corp. v. Christenberry, 173 F.Supp. 645, aff'd 278 F.2d 561 (1959). Among other things it was specifically provided in the instant Breach of Consent Agreement that 'Breach of this agreement may be shown by affidavits'.
"A prima facie showing of violation of the agreement has been made by virtue of the affidavits attached to the Complaint. As pointed out in the American Image case the facts in issue in the breach case are not identical to those in issue in the underlying false representation proceeding. Thus the basic fact in issue in the subject Petition is whether the two instances represented by the exhibits attached to the Petition were in fact not approved by the recipients being invoiced. To the extent the issue is less demanding in terms of what the Government must establish than that involved in the original proceeding, the language of the court in the American Image case is also appropriate here:
'Plaintiff perhaps should never have signed such an agreement had it wished to establish the validity of the claims made on behalf of its product. The opportunity is, however, now foreclosed.'"
Respondent's argument on the merits is in effect an attempt to reopen the merits of the original Complaint rather than the merits of the breach of the Consent Agreement. It may be assumed that Respondent signed the Consent Agreement for reasons that it considered to be in its own good interest and it has had the benefit of the indefinite suspension of the Complaint for almost four months. Its response to the Petition for Breach of Consent Agreement has been evasive and its arguments on the merits would make a mockery of that Agreement. The evidence establishes a breach of the Agreement and accordingly an order under 39 U. S. Code § 3005 is being issued for the Suite 609 address, in accordance with the terms of that Consent Agreement.