In the Matter of the Petition by ) February 7, 1977 ) POST, INC. PUBLICATION ) 320 E. Sullivan Street ) Kingsport, Tennessee 37660 ) P.S. Docket No. 4/163 ) ) Proposed Annulment of Second-Class ) Mail Privileges for "POST NEWS" ) APPEARANCES FOR PETITIONER: Pete Dykes, Publisher Post, Inc. Publications Kingsport, Tennessee APPEARANCES FOR RESPONDENT: Mitchell Knisbacher, Esq. Law Department United States Postal Service Washington, D.C. Lussier, Edward F.
In this appeal from an Initial Decision rendered by Administrative Law Judge Rudolf Sobernheim the Respondent seeks reversal of that decision insofar as it includes certain findings of fact and conclusions of law favorable to Petitioner despite the fact that the Initial Decision upholds Respondent on a limited basis. A very brief summation is here appropriate although the history of the case is covered quite amply in the Initial Decision to which the reader is referred for more details.
Petitioner publishes a newspaper, the "Post News", second class mail privileges for which are sought to be revoked by Respondent on four grounds. These are:
1) that it is designed primarily for advertising purposes, citing Postal Service Manual (PSM) § 132.226;
2) that it lacks a legitimate list of subscribers, citing PSM § 132.225;
3) that it is designed primarily for free circulation, citing PSM § 132.227; and
4) that it is designed primarily for circulation at nominal rates, citing PSM § 132.228.
Judge Sobernheim rejected the first three grounds for revocation but found for Respondent on the fourth holding that the Petitioner sells more than 50 per cent of its newspaper subscriptions at a nominal rate within the meaning of Postal Service Manual section 132.228b. At the same time the Initial Decision deferred recommending issuance of a final order and remanded the case to the parties for no more than 90 days to provide an opportunity for the parties to determine whether, in the light of the other findings and conclusions of the Initial Decision and newly asserted changes in the regular subscription rate, a solution was possible by agreement and, failing that, return to the Administrative Law Judge for further action. Respondent chose instead to appeal the Initial Decision at the same time indicating (Appeal Brief, p. 3), with reference to the methods, indicated in the Initial Decision, by which Petitioner could bring his publication into conformity with the regulations pertaining to entitlement to second class mail privileges, that "Petitioner has followed one of the suggested approaches." However, the Appeal Brief goes on to point out that--
"This appeal is taken from the findings of the Administrative Law Judge that the changes suggested in the Initial Decision are sufficient to entitle the publication to second class mail privileges under § 132, Postal Service Manual. While the Initial Decision indicates that the matter should be suspended at this time while the parties attempt to reach an agreement such an agreement would be conclusive only if the other findings in the Initial Decision are accepted."
It would thus appear that Petitioner has taken steps which would entitle it to second class mail privileges if Judge Sobernheim's decision is otherwise correct. 1/
Respondent's appeal boils down to two basic exceptions to the Initial Decision. The first is to the Administrative Law Judge's denial of its motion to rehear the case because of the loss of the official transcript and the subsequent inability of the parties to agree in all respects as to the testimony of the witnesses. Related to this, but not entirely, are its exceptions to various findings of fact in the Initial Decision. Its second basic exception is to the mixed conclusions of fact and law affording paid subscriber status to households receiving the publication where the publisher is reimbursed directly by the municipality involved.
The first issue relating to the denial of the motion for rehearing raises certain troublesome aspects. I think it clear that the right to a fair hearing includes the right to have all of the testimony considered by the deciding authority. This in turn presupposes that the record of such testimony is available for whatever administrative and judicial review is available from the Initial Decision. Consequently, the loss of the transcript of testimony normally would require a rehearing absent stipulation of the evidence by the parties. On the other hand, if the areas of factual disagreement do not materially affect the outcome of the case the question of denial of a fair hearing becomes moot. Quite obviously whether rehearing is required or not is a question for initial resolution by the presiding officer. If, as here, the matter can be reheard in a half day, prudence would suggest that course the more appropriate. However, at this stage of the proceeding it is necessary only to determine whether the denial of Respondent's request for rehearing in the areas of factual disagreement in the testimony was materially prejudicial to it. Accordingly, an analysis of those areas as they affected, or might have affected, the factual findings is required.
At the outset it is to be noted that Respondent's motion for rehearing argued the general issue of the right to a transcript in light of material differences of opinion between itself and Petitioner with respect to the testimony presented at the hearing. As a separate pleading it filed the same day its Exceptions to Petitioner's Proposed Stipulation as to the testimony at the hearing. 2/ Judge Sobernheim thereafter issued an order sustaining some, and overruling others, of Respondent's exceptions and denying its motion for a rehearing holding such differences of opinion as remained regarding the testimony were not in material conflict on any point of fact other than the parties' evaluations as to the relevance and materiality of certain aspects of the testimony. In so doing Judge Sobernheim overruled Respondent's exceptions to Petitioner's summary of the testimony of Petitioner's two witnesses, Carl Newland and John Fry, stating that the relevance of the disputed testimony would be considered in the Initial Decision. 3/ It is obvious from the
". . . the local postmaster at Church Hill, Tennessee, had repeatedly refused to cooperate in delivering copies of a newspaper as a regular mail service, and that the postmaster had told citizens that their regular mail delivery was late and inefficient because of the PostNews."
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Initial Decision that Judge Sobernheim considered the disputed testimony neither relevant nor material to the decision in the case. Neither do I.
Petitioner's exception to the denial of its motion for rehearing must also be considered in the light of various exceptions it has taken to the findings of fact in the Initial Decision each of which will now be considered. The first of these is to that part of Finding of Fact No. 9 in which it is found that Petitioner appears to have adequate lists at its disposal. Respondent here contends that the lack of specificity in the record regarding subscription lists makes it impossible to determine whether the subscribers are indirectly paying for their subscriptions via their sales tax revenues. It refers to its accepted summary of the testimony of the city recorder of Church Hill to the effect that Church Hill levies only two kinds of local taxes upon residents, one a real property tax used exclusively for street improvements, the other a state sales tax revenue rebated for municipal expenditures, and his further testimony that no list of taxpaying units is maintained. However, Respondent's Exhibit 15, which is the contract between Church Hill and Petitioner, signed by the Mayor of Church Hill, provides that a copy of Petitioner's newspaper will go to "every Church Hill address." A similar contract is in evidence as Respondent's Exhibit 13, for the City of Mount Carmel. Respondent's real difficulty with the finding appears to be the Administrative Law Judge's taking judicial notice that all residents pay state sales taxes, a conclusion I consider most reasonable under the circumstances. Moreover, Respondent has misconceived where the burden rests in a revocation action where there is, as here, at least a prima facie showing in support of finding subscriber contribution. There is no allegation or indication that the missing transcript would supply the missing parts. Nor has any question been raised by Respondent as to the authority of the municipalities concerned to enter into the type of arrangement here involved, and in the absence of countervailing proof, the assumption would normally exist in favor of legitimacy of the government action.
Respondent takes exception to Findings of Fact 11 and 12 insofar as reference is made to a new contract for distribution of the HawkinsCountyPostNews which Respondent appears to contend is properly the "Post News." It is true that the two contracts,
". . . after the PostNews was notified that transcient (sic) rates would be charged, in an arbitrary ruling made by Darwin Sharp in Washington, D.C. without full knowledge or understanding of the situation . . ."
entered into in the fall of 1975, with the two municipalities here involved, relate to the "Post News." However, in view of the Initial Decision's finding that both are identical and must be considered as one, these exceptions lose materiality.
Respondent also takes exception to that part of Finding of Fact 15 that none of the various circulation figures adduced represent, with a desirable degree of accuracy, the current circulation. The exception appears based upon the belief that by so finding Judge Sobernheim thereby rejected a stipulation of the parties. While Finding of Fact 15 appears to treat the differing figures contained in two exhibits on an equal par with the testimony reflecting the parties' stipulation, Conclusion of Law 19 is based upon the latter and, for practical purposes, I conceive no rejection by the Administrative Law Judge of the stipulation agreed upon by the parties.
Respondent's exceptions to the findings of fact and the denial of its motion for a rehearing, all discussed above, are disallowed for the reasons stated.
Respondent's first exception to the Conclusions of Law in the Initial Decision is to the denial of its motion for rehearing, ruled upon above. Its second exception, which is to Conclusion of Law 13, is basically to a lack of a factual basis to conclude that the recipients of the newspaper, being paid for out of rebated state sales tax by the municipality in which they reside, are in fact contributing taxpayers. As already indicated, the record in this case is insufficient to carry the day for Respondent who has the burden of proof in a revocation proceeding.
Respondent also takes exception to Conclusion of Law 16 disputing that Oklahoma Municipal League, P.S. Docket No. 1/137 (1972), and Postrib Corporation, P.S. Docket No. 1/166 (1973) are authority for Judge Sobernheim's decision and contending that Myrick v. U.S., 219 Fed. 1 (1st Cir. 1915), has not been distinguished. In my view to consider Myrick controlling begs the question as the issue here is whether the ultimate recipients have paid for their subscriptions. Further, while discussing certain similarities in principle in the two cited Postal Service cases, the Initial Decision clearly states that the issue in the instant case is one of first impression and thus clearly does not consider those cases as controlling precedent. Here again Respondent raises the same factual argument regarding the inadequacy of evidence as to taxpayer status of the recipients of Petitioner's newspapers. It argues, but doesn't say why, that "there exist substantial grounds for believing that there are substantial discrepancies between the subscription list and the lists of taxpayers in the municipalities." (Appeal Brief, p. 8) Since Respondent's position also is that there are no lists of taxpayers as such (although there must have been some record of property owners for the real estate taxes), the allegation quoted above loses even logical substance especially when one considers the fact that the relevant tax is the state sales tax. Be that as it may, the evidence that is lacking in this proceeding is not in Petitioner's case but in Respondent's case as previously indicated. The Initial Decision is of doubtful precedent precisely because of this but the proceedings have gone on long enough. The decision of the Administrative Law Judge is correct on the record and issues presented. Thus, Respondent's exceptions to the Initial Decision are disallowed and it is hereby affirmed. Assuming that Petitioner has resolved the nominal rate problem to Respondent's satisfaction, as the record indicates, the matter should be at an end. If substantial question exists, despite these indications, the matter will be referred back to Judge Sobernheim for resolution of that limited issue.
1/ This conclusion finds further support in a letter from Petitioner to Judge Sobernheim dated October 9, 1976, and docketed October 14, 1976, which letter relates the efforts to reach agreement in accordance with the suggestion in the Initial Decision. Respondent's Appeal Brief, thereafter filed, takes no issue with the contents of the letter.
2/ Respondent had previously filed its own Proposed Stipulation as to testimony at the hearing.