In the Matter of the Petition by ) February 17, 1983 ) COMMODORE BUSINESS MACHINES, INC. ) The Meadows ) 487 Devon Park Drive ) Wayne, PA 19087 ) ) Denial of Application for Second- ) Class Mail Privileges for ) "COMMODORE - THE MICROCOMPUTER ) MAGAZINE" ) P.S. Docket No. 14/95 APPEARANCE FOR PETITIONER: Eugene V. Lipkowitz, Esq. 487 Devon Park Drive Wayne, PA 19087 APPEARANCE FOR RESPONDENT: Jeffrey H. Zelkowitz, Esq. Law Department United States Postal Service Washington, DC 20260 Grant, Quentin E.
This is an appeal by Petitioner, Commodore Business Machines, Inc., from the denial by the Director, Office of Mail Classification, United States Postal Service, of Petitioner's application for second-class mail privileges for its publication, Commodore - The Microcomputer Magazine (hereinafter sometimes called Commodore or the publication). The pertinent portions of the denial letter, dated September 22, 1982, read as follows:
Your application for second-class privileges for "Commodore - The Microcomputer Magazine" has been reviewed in this office. It has been concluded that the publication is not entitled to be entered as second-class mail.
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 further prescribes that they include publications owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of any business or calling of those who own or control them.
Our letter of August 28, 1982, cited the following as reasons for our conclusion that the publication "Commodore - The Microcomputer Magazine" is not entitled to be mailed at the second-class rates.
A. Item 10 of the application states that "This is a company publication, which informs current, potential customers of product development";
B. Paragraph 7 of the Edition's note further states that "This publication, like the Microcomputer it supports, is part of a product evaluation. It will continue to reflect the substantial growth of the Commodore product line. And it will remain committed to existing Commodore products, as well as new products. Remember, this is not a pet magazine... or a Vic magazine... or 'B' and 'P' service publication. It is "The Microcomputer Magazine for all Commodore products"; and
C. That the "Commodore - The Microcomputer Magazine" is conducted as an auxiliary to and essentially for the advancement of "The Commodore Business Machines, Inc."
Our letter further advised that unless you can provide us within 15 days after receipt of our letter additional information that would support your application it would be denied. The requested information was not received.
Based on our review of the application and your failure to furnish the information that was requested, your application to mail "Commodore - The Microcomputers Magazine" at the second-class rate is denied.
Petitioner took a timely appeal from the denial. A hearing was held in Washington, D.C., at which both parties presented evidence. Neil Harris, publishing manager of Petitioner, testified on its behalf. John C. English, a Mail Classification Specialist, testified for the Postal Service.
The proposed findings of fact, conclusions of law, and written argument filed by each party have been fully considered in arriving at this decision. They have been adopted to the extent indicated. Otherwise they have been rejected as irrelevant, immaterial, contrary to the evidence, or not within the jurisdiction of the Administrative Law Judges of the Postal Service.
1. This proceeding was precipitated by the denial of Petitioner's application to mail Commodore - The Microcomputer Magazine as second-class mail at the Wayne, Pennsylvania, Post Office. This application was signed by Paul M. Fleming, editor of Commodore, on June 22, 1982 (RX-1, item 13).
2. Commodore is owned and published by Petitioner Commodore Business Machines, Inc., 487 Devon Park Drive, Wayne, PA 19087 (RX-1, items 2, 3, 6).
3. Petitioner's principal business is the manufacture of semiconductors, computers, microcomputers, software, and related products (Tr. 21-22, 75; PX-2 at 8, 10, 14; PX-3 at 8, 9, 10-11, 27, 42; PX-4 at 18, 30-31, 79).
4. The application answers the question "are any of the owners or stockholders interested financially in the business or trade represented by the publication?" in the affirmative, and further explains: "This is a company publication, which informs current/potential customers of product developments." (RX-1, item 10; Tr. 10, 24).
5. The Editor's Note in the June/July, 1982, issue of Commodore, under the signature of Paul Fleming, Editor, is entitled "Reaffirming a Commitment." It acclaims a new series of Commodore products and concludes:
For a thorough breakdown of these new products, be sure to read this issue's Commodore News section. And, for more information on our commitment to these products, please read on.
Obviously, when these new advanced systems become available later this year, Commodore Magazine will offer valuable information to readers. However, the reader nucleus of this magazine consists of PET, CBM, and VIC names of three Commodore products users. We will not lose sight of this audience.
This publication, like the microcomputers it supports, is part of a product evolution. It will continue to reflect the substantial growth of the Commodore product line. And it will remain committed to existing commodore products, as well as new products. Remember, this is not a PET magazine . . . or a VIC magazine . . . or "B" and "P" series publication. It is "The Microcomputer Magazine" for all Commodore products (emphasis in original).
(RX-2 at 4; Tr. 13-14, 24).
6. The subscription order form for the publication states: "Get the most our of your Commodore computer with a subscription to Commodore's user magazine," and describes Commodore as follows:
Widely read by educators, businessmen, students and home computerists, this bi-monthly publication provides a vehicle for sharing exclusive product information on Commodore systems, programming techniques, hardware interfacing, and applications for the wide range of Commodore's products. Each issue contains features of interest to anyone that uses, or is thinking about purchasing Commodore equipment. Get the most out of your microcomputer with Commodore Magazine.
(RX-2 between 32 and 33; PX-2 between 8 and 9; PX-3 and 4 between 16 and 17; Tr. 15, 24).
7. Commodore is published bimonthly, and generally consists of ninety to one hundred 8 1/2 by 11 inch pages. A subscription costs $15.00 per year (RX-1, items 7 and 8; RX-2, PX-2, 3, 4).
8. The word "Commodore" is prominently displayed along the top of the front cover and the contents page of the publication, along with a symbol which appears to be the company logo. The words "The Microcomputer Magazine" appear in smaller type face in the upper right corner of these pages (RX-2; PX-2, 3, 4; Tr. 16-17).
9. The publication is identified as "Commodore Magazine" along the side binding. The publication is identified in a similar manner in the lower left corner of even-numbered pages (RX-2; PX-2, 3, 4).
10. The front cover of the June/July, 1982 (RX-2) issue depicts a beach scene in which a computer is built out of sand. The computer's display screen shows the company logo. Similarly, Commodore computers are pictured on the covers of other issues (PX-2, 3).
11. Commodore's editorial material is divided into departments (RX-2, PX-2, 3, 4 at 1). For example, the June/July issue, (RX-2) is divided into the following departments: Q & A Hotline; Editor's Notes; From Where I Sit; Commodore News; Education; Business; VIC 20; Programmer's Tips; Excerpts From a Technical Notebook; Book Review; New Products; Butterfield on Commodore; Bitdiddling; and Projections and Reflections (RX-2 at 1). Each department consists of one or more articles. The end of each article is signified by the company logo.
12. Certain articles from these departments may be listed as "Features" and prominently displayed and described on the contents page (RX-2, PX-2, 3 at 1). For example, five articles are listed as features in the June/July, 1982, issue (RX-2), one article each from the departments labeled Commodore News, Education, Business, VIC 20, and Programmer's Tips. The first praises the new Commodore products introduced at the National Computer Conference in June, 1982. The second describes the use of the Commodore PET computer in a middle school computer program. The third describes the use of a Commodore VIC 20 computer in the production of a radio talk-show program. The fourth describes the use of certain keys on the Commodore VIC 20 computer. Finally, the fifth feature article provides a programming tip for the Commodore PET computer. Featured articles in other issues also are devoted to Commodore products (PX-2, 3 at 1).
13. Nearly all of the articles and other editorial matter in Commodore are solely devoted to Commodore's computers and other products. The articles describe Commodore products in favorable terms, and discuss new Commodore products, uses and applications for Commodore products, pointers for their use, or products and services which may be used in conjunction with them (RX-2, PX-2, 3, 4; Tr. 14-15).
14. Most of the advertisements in Commodore are for products and services designed to be used or capable of being used with Commodore products. A number of these advertisements describe the goods advertised as "Officially Approved by Commodore." (RX-2; PX-2, 3, 4).
15. When asked what impact the publication of Commodore has on Petitioner's principal business, Petitioner's publishing manager, Neil Harris, emphasized its value to users of Commodore computers as a source of information on new products of Petitioner, and others (Tr. 75).
16. Petitioner does not maintain separate sets of financial documents for its computer manufacturing operations and "Commodore" publishing operations (Tr. 74).
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 publications 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 conducted as an auxiliary to and essentially for the advancement of any other business or calling of those who own or control them."
Petitioner's Memorandum of Law raises two legal arguments, one based on the Constitution, the other on precedent, to demonstrate that the denial of its application should be overturned.
Petitioner's constitutional argument is that § 422.231(b) violates the First Amendment of the United States Constitution in that its requirement that postal officials make qualitative judgments about the editorial content of general publications has a chilling effect on freedom of speech and press. Petitioner further says that the denial of its application violates the due process test of the Fifth Amendment (incorporating the equal protection clause of the Fourteenth Amendment) in that while it denies Petitioner's application, it ignores possible violations of the same regulation by other publications such as Case & Comment, Playboy, Newsweek, and the various publications of Time Incorporated.
Petitioner's argument based on precedent refers to the initial decision in Smokenders, P.S. Docket No. 4/192 (1977). In that decision it was held that the publication Smokender World was an auxiliary to Petitioner's main business (conducting seminars to teach smokers not to smoke) but that it was not conducted to advance that business. Rather, the magazine was published to assist graduates to persevere in not smoking, any gains in seminar enrollment attributable to the publication being only incidental.
Petitioner equates the purpose of its publication Commodore with that of Smokender World. Citing the testimony of its publishing manager, Neil Harris, it says that the magazine is designed to assist individuals who are the equivalent of graduates of Smokenders seminars - that is, individuals who have already purchased a computer and peripherals - to persevere in the difficult task of making a computer do what you want it to do and that the publication is only of incidental benefit to Commodore Business Machines, Inc. in keeping it viable and prosperous.
Petitioner argues that the initial decision in LaSalle County Legal News & Public Record, P.S. Docket No. 12/113, Init. Dec. 5/28/82, relied on by Respondent is wrong in applying the principle, or test, that mere mention of the other business (of the owner and publisher) is all that is required to establish a rebuttable presumption that the purpose of the publication is to advertise the non-publishing business. Petitioner says that such a test violates the First Amendment guarantee of freedom of the press in its "chilling effect" on publishers.
Respondent says that the record establishes that the publication is "designed for advertising purposes" and thus barred from being mailed at second-class rates under § 422.231(b), DMM for two distinct reasons: (1) the publication is intended to support, benefit, and advance another business of Petitioner, i.e., Petitioner's sale of computer equipment and related products and (2) the publication is an integral part of Petitioner's computer business and is, therefore, auxiliary to and essentially for the advancement of that business.
Respondent further says that Petitioner has failed to rebut the presumption created by the advertising and mention in "Commodore" of its nonpublishing business, that the purpose of the publication is to advertise the nonpublishing business (citing LaSalle County Legal News & Public Record Bulletin, supra, and Holmes Management Company, P.S. Docket No. 4/71, Init. Dec. 10/20/60).
According to 39 CFR § 224.1(c)(4)(iv)(B), Administrative Law Judges do not determine the constitutionality of statutes nor the validity of Postal Service regulations. Therefore, this decision will not dispose of Petitioner's arguments based on the Constitution.
The sole issue to be considered here is whether Commodore - The Microcomputer Magazine has been properly denied second-class mail privileges on the basis that it is the type of publication described in § 422.231(b) of the DMM. I conclude that it is beyond any serious doubt that this magazine is such a publication. Following are my reasons for so concluding:
(a) The publication is owned and controlled by Commodore Business Machines, Inc. and (Petitioner interposing no argument to the contrary) is obviously conducted as an auxiliary to its principal business, i.e., manufacturing computers, microcomputers, software, and related products.
(b) The publication is conducted essentially for the advancement of Petitioner's principal business. This conclusion is based on the following reasons:
1. Item 10 of Petitioner's application for second-class mail privileges (RX-1), signed by the then editor, states that Commodore is a company publication "which informs current/ potential customers of product developments." Certainly the editor of a publication is in a position to know its main purpose and this statement, unlike the testimonial statements of Mr. Harris, was made before the present dispute arose. It is a matter of common knowledge that a manufacturer ordinarily goes to the trouble and expense of telling current and potential customers about product developments in order to sell more of its products. Even the primary purpose of the publication as expressed by Mr. Harris --"to be the number one source of information for Commodore computer users, information for products, and other types of information relevant to the Commodore computers that they are the owners of" (Tr. 63) necessarily advances Commodore's principal business in obvious ways. It only makes sense to think that a wellinformed, satisfied Commodore computer owner is likely to stay with Commodore products when it comes time to upgrade or expand his computer equipment.
2. Nearly all the advertisements in the publication are for Commodore products or products of other companies, many of them bearing the notation "officially approved by Commodore", specifically and prominently offered as being compatible with Commodore computers or enhancing or expanding the capacity of Commodore computers. Dissemination of information about the availability of such products can hardly help but advance Petitioner's business.
3. Other statements in the publication lending strong support to my conclusions are those set forth in Findings of Fact numbers 5 and 6, supra.
4. Finally, and perhaps more compellingly conclusive than any of the foregoing reasons is the editorial and article content of the magazine. Referring to the December 1982/ January 1983 issue, for instance, the following departments all contain letters, articles, or editorials touting present and/or future Commodore products: The Arts (pp. 5, 6, 9; Letters, p. 12; Editor's Notes, p. 14; From Where I Sit, p. 15; Commodore News, pp. 17, 18, 19; Education, pp. 22, 24, 26; Business News, pp. 28, 29, 30, 31; Home, p. 36; Technical, pp. 61, 62, 67, 68; User Developments, pp. 79, 80; Captain Scuttlebut's Unbelievable Rumors, pp. 97, 98).
There is little similarity between the facts in this case and those in Smokenders, supra. The publication in that case was for the exclusive use of graduates of the Smokenders program and physicians. It was designed to assist graduates to persevere in not smoking. The Administrative Law Judge found that the small number of copies sent to physicians did tend to enhance the Petitioner's main business, conducting seminars for a fee, but was not sufficient to tilt the balance of the preponderance of the evidence against Smokenders. In the instant case the major thrust of the publication is the promotion of present and future Commodore products for the obvious purpose of the sale thereof.
Petitioner's publication, Commodore - The Microcomputer Magazine, is not entitled to second-class mail privileges because it is a general publication primarily designed for advertising purposes in that it is owned and controlled by Commodore Business Machines, Inc. and conducted as an auxiliary thereto and essentially for the advancement of its principal business, i.e., the manufacture and sale of computers, microcomputers, software and related products.
The Office of Mail Classification's decision denying Petitioner's application was correct, in accordance with § 422.231(b) of DMM, and is hereby affirmed.