In the Matter of the Complaint Against LaSALLE COUNTY LEGAL NEWS & PUBLIC RECORD BULLETIN 105 East Court Street Kankakee, Illinois 60901 Denial of Application for Second-Class Mail Privileges P.S. Docket No. 12/113; APPEARANCE FOR PETITIONER: Blanke, Norden & Barmann by Paul E. Blanke, Esq. Suite 500 189 East Court Street Kankakee, Illinois 60901 APPEARANCE FOR RESPONDENT: Joseph F. Wackerman, Esq. Jeffrey Zelkowitz, Esq. United States Postal Service Washington, DC 20260 05/28/82 Grant, Quentin E.
This is an appeal by Petitioner, C-A-B Services, Inc. from the denial by Respondent of an application for second-class mail privi leges for Petitioner's publication. LaSalle County Legal News and Public Record Bulletin.
The pertinent portions of the denial letter issued on October 5, l981, by the Director, Office of Mail Classification, read as follows:
Your application for second-class mail privileges for "LaSalle County Legal News and Public Record Bulletin" has been reviewed by this office. It has been concluded that the publication is not entitled to be entered as secondclass mail for the reasons stated below.
"Section 422.231, Domestic Mail Manual, prescribes that general publications primarily designed for advertising purposes may not qualify for second-class mail privileges.
"Subsection (b) of that regulation prescribes that they include those owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of any other business or calling of those who own or control them.
"The January 19, l918 issue of "LaSalle County Legal News and Public Record Bulletin" which was submitted with the application appears to be devoted almost exclusively to the interests, financial or otherwise, of The Credit Bureau, Division of C-A-B Services, Inc., which is located at 105 E. Court Street, Kankakee, Illinois.
"Since it appears that "LaSalle County Legal News and Public Record Bulletin" is conducted as an auxiliary to and essentially for the advancement of the Credit Bureau, Division of C-A-B Services, Inc., we have concluded that copies of issues of "LaSalle County Legal News and Public Record Bulletin" are not entitled to be mailed at the second-class rates of postage."
Petitioner took timely appeal from the denial. A hearing was held in Chicago, Illinois. The parties have filed proposed findings of fact, conclusions of law and written argument all of which have been considered and adopted to the extent indicated. Otherwise they have been rejected as irrelevant, immaterial, or contrary to the evidence.
1. The LaSalle County Legal News and Public Record Bulletin is published by The Credit Bureau of Kankakee, Illinois, 125 South Vermillion, Streator, Illinois 61634. (RX-E). The Credit Bureau is a division of C-A-B Services, Inc., an Illinois not-for-profit corporation, which operates a number of credit reporting services and other businesses throughout North Central Illinois. (Tr. 128-129). The corporate purpose of Petitioner as set forth in its articles of incorporation (RX-10) is to operate, maintain, and manage facilities for the accumulation and dispensing of credit information.
2. Petitioner's business services include publication and sale of public record bulletins to subscribers; reporting (providing credit worthiness information on particular individuals or companies); collection (collecting delinquent accounts for third parties); counseling (counseling and assisting debtors to work out creditor arrangements); printing (commercial printing); and license (obtaining vehicle license plates for the customers). (Tr. 128). In five counties, Grundy, Jasper, Ford, Newton, and Livingston, it conducts only its reporting service (Tr. 87). In Will County it conducts collection, bulletin, reports, counseling, and printing (Tr. 128). In Iroquois County it conducts collection, bulletin, reports and license (Tr. 128). In LaSalle County, here under review, it conducts reports (only for a portion of the county) and bulletin operations (Tr. 129, 133, 134). It is an application for a second-class permit for that final item, the LaSalle County Legal News PUblic Record Bulletin (hereinafter referred to as the Bulletin) that gives rise to this proceeding.
3. The Bulletin is currently published weekly and consists of 6 to 10 pages, 8 1/2 x 4 inches, bound together by a single staple in the upper left-hand corner of the page (RX-A, B). A subscription to the Bulletin costs $90.00 a year (RX-K; Tr. 93).
4. The Bulletin is composed of updated listings of public records and instruments of record filed in the two LaSalle County courthouses (Tr. 66) and petitions in Bankruptcy for the Northern District of Illinois, Eastern Division, taken from the Chicago Daily Law Bulletin (RX-A, B). The categories of listings include, among others, vacated judgments, judgments of the circuit court, judgments for dissolution of marriage, judgments of legal separation, peti tions for dissolution of marriage, releases, articles of incorporation, deeds of trust, executor's deeds, financing statements, junior trust deeds, lis pendens notices, mechanics liens, notices of federal tax liens, notices of liens, potential inheritances liens, quit claim deeds, loan modification agreements, real estate mortgages, security agreements, agreements to purchase, articles of agreement, memoranda of agreements for warranty deeds, warranty deeds, warranty deeds in trust, memoranda of judgments, and marriage licenses (RX-A, B). In addition, the publication sometimes contains notices for credit bureau members and identifies the publisher and the local credit bureau owned by the publisher in LaSalle county (Tr. 30, 64, 65).
5. C-A-B Services also provides a range of credit reporting services to individuals and organizations who have entered into a membership contract with the Bureau. Full members must pay a $110 yearly fee which entitles them to receive the Bulletin and the privilege of using the Credit Bureau's services by purchasing individual credit reports at member prices (RX-K, L, M, Tr. 97). Reporting members must pay a $60 yearly fee which entitles them to purchase individual credit reports at member prices (RX-K; Tr. 93, 106). Non-members who subscribe to the Bulletin are entitled to purchase individual credit reports at higher non-member prices (RX-K; Tr. 71). Non-members who do not subscribe to the publication are entitled to purchase individual credit reports at higher non-member prices upon payment of a $15.00 annual fee (RX-K; Tr. 86, 107).
6. Data collection for Petitioner's credit reporting and publishing activities is performed by a single group of employees without any separation or differentiation based on whether they work for the reporting or the publishing parts of Petitioner's business (Tr. 78-81). Petitioner employs only a credit reporter and a courthouse reporter in its LaSalle County operations (Tr. 80).
7. Petitioner does not allocate receipts from combination memberships to memberships and Bulletin subscriptions (Tr. 94, 95). It does not maintain a reliable allocation of costs between reporting and Bulletin activities (Tr. 143).
8. The great preponderance of information collected and reported in the course of Petitioner's credit reporting activities is identical to that published in the Bulletin (Tr. 66-68, 82-83). The proportion of items in the Bulletin not included in Petitioner's credit files, namely, transfers of property, marriage licenses, and some items relating to corporations, varies from issue to issue. (Tr. 82, 83). Petitioner says these items constitute about 36% of the items appearing in the Bulletin.
9. By far the greater part of the information used in the Bulletin is information the Petitioner acquires in the ordinary course of its credit reporting business (Tr. 66-68, 82, 83).
10. Each issue of the Bulletin contains the following notices:
ISSUED WEEKLY THE CREDIT BUREAU, 125 South Vermillion, STREATOR, ILLINOIS 61364
815-672-2176
PLEASE NOTE: The Public Record Bulletin published on this and succeeding pages is for use of subscribers only. Subscribers are assured that all matters of public record regularly shown in Public Record Bulletin will always be published as no item regularly published will ever be deleted. Information is secured through reliable sources and believe the information shown is correct, but we assume no liability for any variations, errors or omissions.
THE CREDIT BUREAU, STREATOR, ILLINOIS 61364
In cooperation with Ottawa Credit Bureau and Credit Bureau of Tri- Cities, Inc., LaSalle
Direct Inquiries to:
LaSalle County Legal News/Public
THE CREDIT BUREAU Bulletin is published weekly by: The 125 South Vermillion Credit Bureau, 105 East Court Street, Streator, Illinois 61634 Kankakee, Illinois 60901. POSTMASTER:
815-672-2176 Send address changes to: The Credit Bureau, 105 East Court Street, Kankakee, IL 60901
11. Thus, each issue of the Bulletin provides readers with notice that the publisher is engaged in another business or calling; namely, the reporting of credit information (RX-A, B, Tr. 30-33, 44-45).
12. According to Petitioner's owner, Norman Strasma, C-A-B publishes the Bulletin as an independent way to make money and for the purpose of making money as opposed to helping other parts of C-A-B's business (Tr. 131, 132). Petitioner makes a profit from he sale of the Bulletin (Tr. 154).
13. An increasingly large amount of information which Peti tioner uses in its credit reporting business is derived from sources other than those from which Bulletin information is derived (Tr.135-139).
14. The record does not reflect any direct connection between the information printed in the Bulletin and Petitioner's collection, debtor counseling, license, and printing services.
15. Approximately 70% of telephone calls received by Peti tioner from inquirers not connected with Petitioner relate to the Bulletin (Tr. 116).
16. Some of the reader, or buyer, uses of the Bulletins are different from uses of Petitioner's credit reporting service (Tr. 116, 117).
17. Of a total of 203 Bulletin and credit reporting customers in LaSalle County, 132 subscribe to the Bulletin only (RX-1; Tr. 54).
Under § 422.1 of the Domestic Mail Manual (DMM) "general publications" are one of the five categories of second-class mail. Section 422.231 of the DMM, however, states that "General publica tions primarily designed for advertising purposes may not qualify for second-class privileges" and that these include "Publications owned or controlled by individuals or business concerns and con ducted as an auxiliary to and essentially for the advancement of any other business or calling of those who own or control them."
Respondent says that Petitioner has failed to sustain its burden of proving entitlement to second-class mailing privileges because of preponderance of the evidence shows that the Bulletin is primarily designed for advertising purposes in that it is conducted as an auxiliary to and essentially for the advancement of, Petitioner's credit reporting business.
Respondent says that the mere notice given in the Bulletin of Petitioner's credit reporting business is sufficient to find the publication to be primarily designed for advertising purposes, citing and 1877 opinion of the Assistant Attorney General (1 Ops. A.A.G., P.O.D. 406, 407).
Citing Holmes Management Company, P.S. Docket No. 4/71 (I.D. 2/12/76) Respondent says that if a person in a particular business undertakes to issue a publication in which that business is mentioned, there is a presumption that the purpose of such person is to advertise his non-publishing business. Respondent asserts that Petitioner has not succeeded in rebutting that presumption.
Respondent argues further that the Petitioner by means of a tie between subscription to the Bulletin and preferred rates to subscribers for its credit reports directly seeks to advance its credit reporting business.
Finally, Respondent says that Petitioner's Bulletin operation and its credit reporting operations are so interwoven that they constitute a single business, are mutually dependent and supportive, and that, therefore, the Bulletin part of the business must be auxiliary to and essentially for the advancement of the credit reporting side of the business.
Petitioner's argument emphasizes the words "primarily" and "essentially" in § 422.31. Petitioner contends that the evidence shows that whatever advertising for the credit reporting business appears in the Bulletin and advertising is not the primary purpose of the publication and that the evidence also shows that the publication is not essentially for the advancement of the other business of Petitioner.
Petitioner has offered to make any "reasonable modification to the Bulletin as to permit size, items, owner name designation and has agreed to eliminate anything even approaching advertising" (Tr. 49; Br. pp. 6, 7). Respondent takes the position that no such changes would alter its position because the basic disqualification would persist, that being the fact (asserted by Respondent) that the Bulletin and credit reporting operations of Petitioner are so inter woven as to constitute, in effect and in fact, a single business to which the Bulletin is necessarily auxiliary and which it essentially advances.
The Bulletin on its face does not appear to be designed pri marily for advertising purposes. That fact, however, does not resolve the issue for precedent has it that if a person or firm in a particular business issues a publication in which that business is mentioned, there is a rebuttable presumption that the purpose of the publication is to advertise the non-publishing business. Holmes Management Company, supra. Therefore, it must be determined whether Petitioner has rebutted the presumption with a preponderance of the evidence. I think it has failed to do so.
As the findings above clearly demonstrate, publication of the Bulletin is not separated from Petitioner's credit reporting activity but is, in fact, inextricably interwoven and interdepen dent therewith in terms of commonality of information used in the Bulletin and in Petitioner's credit report files (or computer data banks), of personnel used in gathering such information, and in terms of preferential connection between fees charged for membership in the Credit Bureau, fees charged for credit reports, and subscrip tion price of the Bulletin. It seem obvious that the Bulletin is designed to provide subscribers preferential access to Petitioner's credit reporting business and thereby gain new customers for that business. The degree of success achieved by the design is not, I think, of controlling importance, nor is the fact that Petitioner says income from the Bulletin exceeds the cost of publishing. In this connection Petitioner's assertion lacks the support of a reliable allocation of costs between credit reporting and Bulletin activities so as to permit acquisition of accurate costs of Bulletin publication.
Petitioner says that while the Bulletin contains some advertising related to Petitioner's other businesses, it is obviously insufficient in quantity to constitute such advertising the primary or essential purpose of the publication. But a large quantity of advertising is not required to activate the presumption discussed above. Mere mention of the other business is all that is required. Holmes Management Company, supra. Once the presumption arises, as here, the numerous other factors mentioned above relating the publication to the other business must be examined.
LaSalle County Legal News and Public Record Bulletin is a general publication primarily designed for advertising purposes in that it is owned by Petitioner, C-A-B Services, Inc. and conducted as an auxiliary to and essentially for the advancement of Petitioners credit reporting business. Therefore, under § 422.231 of the DMM such publication does not qualify for second-class mail privileges.
The ruling of the Director, Office of Mail Classification, denying Petitioner's application was correct and is hereby affirmed.