In the Matter of the Complaint Against NATIONWIDE GRAPHICS, INC. 420 Lincoln Road at Miami Beach, FL 33139 P.S. Docket No. 13/106; 05/28/82 Duvall, William A. APPEARANCE FOR COMPLAINANT: Norma J. Brown, Esq. Clark C. Evans, Esq. United States Postal Service Law Department 475 L'Enfant Plaza West, S.W. Washington, DC 20260 APPEARANCE FOR RESPONDENT: Ron Brownlee, Vice-President Nationwide Graphics, Inc. 420 Lincoln Road Miami Beach, FL 33139
This proceeding was initiated on April 13, l982, when the General Counsel of the United States Postal Service, the Complainant, filed a complaint in which it is alleged that Nation- wide Graphics, Inc. of Miami Beach, Florida, the Respondent, is engaged in conducting a scheme or device for obtaining money or property through the mail by false representations within the meaning of Section 3005 of Title 39, United States Code.
In the complaint it is alleged that Respondent attracts attention to this scheme by solicitations in the form of bills, invoices or statements of account which solicit payment by the addressees to the Respondent by mail. Copies of invoices typical of those referred to are attached to the complaint as Exhibits A, B and C.
It further alleged that by means of such invoices, bills or statements of account, Respondent represents expressly or implicitly, in substance and effect, whether by affirmative statements, omissions or impliedly, that:
(a) the goods identified on the face of the solicitations were previously ordered by the addressee;
(b) the amount set forth on the face of the solicitation is owing and due to Respondent from the addressee.
The Complainant charges, lastly, that the foregoing representa tions are materially false as a matter of fact, and Complainant requests that an order as provided in 39 U. S. Code Section 3005-(a)(1) and (2) be issued against this Respondent.
There was received from the Respondent a letter dated April 22, l982, the content of which, in substance, reads as follows: "Under no circumstances did we use a scheme or false representations to these people. Obviously, after these people gave their verbal okay to the order, they had changed their mind.
It is further stated in the letter that in each of the three cases indicated by an invoice attached to the complaint, the Respondent had merchandise picked up for them at its expense. Respondent said that no payment was made to the Respondent in any of the three instances and that the invoice had been canceled in Respondent's books for quite some time.
Finally, it is stated in the Respondent's letter that the Respondent does not understand why the United States Postal Service got involved in this situation since everything has been straightened out. The Respondent concludes by saying that it does not wish to do business with the people billed because of the false charges brought by the latter against the Respondent. This letter was signed Ron Brownlee, Vice-president of the Respondent.
As indicated on the record, the testimony of the Complainant was taken in this proceeding and a decision was issued under Section 952.11(b) of the Rules of Practice, which covers situations of this type in which an answer is filed but no appearance is entered on behalf of the Respondent.
Inspector Gary D. Cantley testified that he is the inspector who investigated this case. During the course of his investigation he received 26 complaints, all of which came from banks. He personally contacted representatives of eight of these 26 complainants.
The complainants interviewed by the inspector are those banks listed in Complainants Exhibits A through J. Of the eight banks contacted by the Inspector, not a one had either ordered or received supplies from the Respondent. Most of the individuals speaking on behalf of the banks had similar experiences in the dealings between the Respondent and the banks.
Some representative of the bank would receive a telephone call in which the caller indicated that he was sorry that the supplies for a copying machine had been delayed in shipment; that he was checking to see what kind of equipment was in use in the bank; and that he wanted to be sure that the supplies he was sending would be compatible with that particular equipment. The caller then assured the bank representative that the shipment would be coming soon.
Shortly after this conversation, an invoice would be received. In one case, namely, the Merchants National Bank and Trust Company, 216-220 South Warren Street, Syracuse, New York, the Respondent sent four invoices to the bank and all of the invoices are in the identical amount of $588.
The supplies for which the amount of $588 is said to be due are toner for Kodak K10-4030 copying machine. The first three of these invoices were paid by the bank and then suspicion was raised, basically, because the third invoice was dated January 12, l982. That was a rate of delivery of this toner which was regarded as being much to frequent. The matter was investigated within the bank and it was discovered that no one had ordered or received any material from this source, the Respondent.
Another witness, Ms. Pat Baker, from Charlotte, North Carolina, who is an administrative assistant with the Branch Banking and Trust Company of Charlotte, stated that she received two or three phone calls of the nature just described in connection with the Syracuse, New York bank.
Ms. Baker, however, did not take steps looking toward the payment of the invoice. She made some inquiries and discovered that no order had been placed with the Respondent. Ms. Baker reported the matter to the Attorney General of the State of North Carolina and she also reported the matter to the postal authorities, who advised Ms. Baker that they would pursue the investigation.
Based on the evidence that has been received this morning, both documentary and oral, I make the following findings of fact:
1. In the conduct of its business the Respondent uses the mails to transmit its invoices by which it solicits remittances of money to be sent through the mail.
In support of this finding, I would refer to Complainants Exhibits C and D and their subexhibits. These are typical of the remainder of the exhibits submitted by the Complainant which run from A to Z, with two additional exhibits which have been identi fied as AA and BB. Exhibit D-7 is a return envelope which bears the return address of the Respondent in this case and the address is as shown in the caption of this decision.
2. In each case, it is implicit in the invoice that a stated sum of money is due from the addressee to the Respondent in payment for the given quantity of specified product. Among other things, discount terms for prompt payment as stated, and additional amounts over the base prices are shown to be due for payments made in 30, 60 or 90 days. (CX-E-2) The addressee is told to return a portion of the invoice with the remittance that is demanded by the invoice.
In each case, the Respondent represents expressly or implicitly that the goods identified on the fact of the solicitation were previously ordered by the addressee and that the amount set forth on the face of the solicitation is owing and due to the Respondent from the addressee.
The finding that the Respondent makes representations as set forth in the complaint is based upon the criteria for determining the meaning of advertising matter set forth in Donaldson v. Read Magazine, 333 U. S. 178, 188-189 (1948); Borg-Johnson Electronics v. Christenberry, 169 F. Supp. 746 (SD NY l959); and G. J. Howard Company v. Cassidy, 162 F. Supp. 568, 572 (ED NY 1958).
3. The representations found to have been made by Respondent are material representations because they are of the kind and character that would cause and, indeed, in some cases did cause readers to remit the sums of money sought by the Respondent.
4. The representations found to have been made by the Respon dent are material representations and they are false as a matter of act.
5. Even if the Respondent had ceased making the false represen tations, that fact would constitute no bar to this proceeding. United States v. W. T. Grant Company, 354 U. S. 629, 632 (1953); Warner Lambert Company v. FTC, 562 F.2d 749 (DCDC), certiorari denied, 435 U. S. 950 (1978).
Upon the basis of the testimony and the exhibits previously reviewed herein, as well as those received in evidence in this proceeding, it is concluded that the Respondent is, as charged, engaged in conducting a scheme or device for obtaining money through the mails by means of false representations within the meaning of 39 U. S. Code 3005.
The Complainant has asked that it be found that the invoices mailed by Respondent are not in fact invoices for money due for goods or services rendered, but that they are solicitations. I have some problem with that.
The fact of the matter is that the invoices are not even solici tations because there is no indication in this record that the Respondent ever intended or now intends to mail, or send by other means, these supplies for the copy machine for which it is asking to be paid. I don't think this record warrants finding that the document mailed by Respondent is a solicitation. I think it is simply an out-and-out misrepresentation and fraud.
I am not going to make the requested finding for the reason that the Complainant does not contain any allegation on the point raised by Complainant's counsel. The point was not raised until oral argument. While it is not likely that the inclusion of that charge in the complaint would have made any great difference to the Respon dent, and it probably would not have caused him to appear this morning, nevertheless, I believe that in such a matter as this the Respondent is entitled to notice.
What is actually being sought is that the invoices be found to be in violation of Section 3001(d) of Title 39, United States Code. It is also sought that the invoices be declared to be nonmailable, and that they also be found to constitute a prima facie case that the Respondent is violating Section 3005 of Title 39 of the United Sates Code. There is no question about the violation of Section 3005 in this present case so I don't think either side is being prejudiced by my not acting favorably upon the request of Complainant with respect to Section 3001.
In view of all of the foregoing facts, circumstances, and considerations, an order of the type contemplated by Section 3005 of Title 39, United States Code should be issued against this Respondent.
Complainant has, based upon a novel and interesting interpre tation, of Section 952.11(b) of the Rules of Practice, moved that this matter be referred to the Judicial Officer at this time without further notice to the Respondent and that it be suggested to the
Judicial Officer that he issue his decision based upon the present state of the record. (See discussion at Tr. 24-25) That motion was granted.