In the Matter of the Complaint Against ASSOCIATED TELEPHONE DIRECTORY PUBLISHERS, INC. and ATD and ATD ADVERTISING DEPARTMENT-YELLOW PAGES P. O. Box 3309 Corpus Christi, TX 78404-0309 and P. O. Box 3387 Corpus Christi, TX 78404-0387 and P. O. Box 6170 at Huntsville, TX 77340-2270 P.S. Docket No. 13/191; 01/25/84 Cohen, James A. APPEARANCES FOR COMPLAINANT: H. Richard Hefner, Esq. Clark C. Evans, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-1112 APPEARANCE FOR RESPONDENT: Clyde J. Jackson, Jr., Esq. 3210 S. Alameda Corpus Christi, TX 78404-2508
Respondent has appealed from the Initial Decision of an Administrative Law Judge which holds that by use of its direct mail solicitations for advertising listings in its yellow page buyers guide, Respondent is engaged in a scheme or device to obtain money through the mail by means of materially false representations in violation of 39 U.S.C. ??3001(d) and 3005.
On July 2, 1982, the Consumer Protection Division, Law Department, United States Postal Service (Complainant), filed a Complaint alleging that Respondent, issuing solicitations in the guise of bills, invoices of statements of account due, falsely represents that:
(a) It represents or is affiliated with the Bell Telephone System.
(b) The amount set forth on the solicitation is for advertising to be published in the Bell Telephone Company Yellow Pages telephone directory.
(c) The directory advertising set forth on the face of the solicitation was previously ordered from the Respondent by the addressee.
(d) The amount of money specified on the face of the solicitation constitutes an obligation owed by the addressee to Respondent.
The Complaint also alleges that the solicitations are nonmailable matter under 39 U.S.C. § 3001(d), and constitute prima facie evidence that Respondent is engaged in conducting a scheme or device within the purview of 39 U.S.C. § 3005.
In a timely filed Answer Respondent admitted that the circular attached to the Complaint was a copy of its solicitation but alleged that the black and white reproduction did not show the different colored printing in the advertisement. Further, Respondent denied the other allegations of the Complaint. A hearing was held before the Administrative Law Judge at which both parties presented documentary and testimonial evidence.
Following the hearing and the parties' submission of proposed findings of fact and conclusions of law, the Administrative Law Judge issued an Initial Decision in which he found that Respondent makes the representations alleged in the Complaint and that they are materially false in violation of 39 U.S.C. § 3005. He also concluded that Respondent's direct mail circulars are nonmailable under 39 U.S.C. § 3001(d). On the basis of these findings the Administrative Law Judge recommended the issuance of a False Representation Order against Respondent.
In its appeal Respondent presents eight exceptions to the Initial Decision. While these exceptions take issue with various findings and conclusions of the Initial Decision, as Respondent points out, its exceptions essentially relate to whether it represents it is affiliated with the Bell Telephone System and whether its solicitations are in the form of, and reasonably could be interpreted or construed as a bill, invoice or statement of account due. Respondent does not challenge the findings that these representations are false, except to the extent they are predicated on the findings that the representations are made.
Respondent contends that the Administrative Law Judge improperly relied on the implication of four factors in reaching the conclusion that Respondent misrepresents its relationship with Bell Telephone. According to Respondent, the four factors should not have led the Administrative Law Judge to that conclusion. Respondent also contends that the Administrative Law Judge improperly shifted the burden of proof to Respondent.
The four factors relied on by the Administrative Law Judge were: (1) the use of the walking finger logo, (2) the emphasis on the words "Yellow Page," (3) the use of yellow paper on which the solicitations are printed, and (4) the inclusion of a copy of a prior advertisement ("tear sheet") from a Bell System Telephone Directory (I.D. p. 4). According to Respondent the first three factors cannot legally constitute evidence of an implied relationship between it and Bell Telephone because none of the factors alone or together are the exclusive property of Bell, but rather are matters within the public domain. Respondent argues that the fourth factor relied on by the Administrative Law Judge, the copy of the advertisement, is simply the most accurate way to show prospective subscribers exactly what their new advertisement will look like.
Regardless of the legal rights between Bell and Respondent, the use of the walking finger logo, the words "Yellow Page," and the yellow paper on which the solicitations are printed are associated by the public with the Bell System telephone directory. When coupled with an actual copy of an advertisement from Bell's yellow pages, the impression created in the mind of an ordinary reader is that Respondent is affiliated with Bell Telephone Company, and that the solicitation is for advertising to be published in a Bell Telephone Yellow Pages directory. Although Respondent does not use the name Bell Telephone in its advertisements, there is, nevertheless, an impression created which implies that Respondent is affiliated with the Bell Telephone System.
Because of the relationship implied by the totality of the solicitation, an ordinary reader would also reasonably infer that the copy of the directory advertisement, which is glued or taped to the face of Respondent's solicitation, had been previously ordered from Respondent for an earlier directory. However, as discussed hereafter, the ordinary reader would not necessarily conclude that the directory advertising affixed to the face of the solicitation was previously ordered from Respondent for the upcoming directory.
Respondent argues that the Administrative Law Judge improperly shifted the burden of proof to Respondent by finding that it's exhibits "do not disprove that a substantial number of the approximately 210,000 recipients" were misled. To the extent the Administrative Law Judge may have misperceived Respondent's burden of going forward with evidence and found that a substantial number of the recipients were actually misled, he erred, as there is insufficient evidence to support such a finding. However, such error is not reversible because he nonetheless correctly concluded on the basis of the circulars in evidence, and the testimony of Complainant's witnesses, that Respondent makes the representations alleged in paragraphs III (a) and (b) of the Complaint.*/
Accordingly, it is concluded that Complainant has established that Respondent makes the representations alleged in paragraphs III (a) and (b) of the Complaint. It is also concluded that Respondent makes the representation alleged in paragraph III (c) of the Complaint to the extent that this paragraph charges that Respondent's solicitations represent that the advertising set forth on the face of the solicitation had been ordered for inclusion in a previous directory.
In Finding of Fact II and Conclusion of Law VI the Administrative Law Judge found that Respondent's solicitations were in the form of, and reasonably could be construed as, invoices for advertisements previously ordered. Respondent contends that its solicitations could not be understood by an ordinary reader to be a bill, invoice or statement of account due for advertisements previously ordered.
The witnesses for both parties gave conflicting views on whether Respondent's solicitations could reasonably be interpreted or construed as bills, invoices, or statements of account due. However, the most compelling evidence is the solicitations themselves. TELEX & twx DIRECTORY, P.S. Docket No. 13/6 (P.S.D. April 1, 1983). The wording of Respondent's solicitations which most support Complainant's position are the typed-in dollar amount of the cost of the advertisement, the instructions to make the check payable to Respondent, and the attachment of a "tear sheet," or copy of an existing advertisement, which Complainant's expert witness testified is commonly sent with invoices for advertising (Tr. 130-31).
The wording of Respondent's solicitations which militates against Complainant's interpretation is the prominent red print statement, "Because of the Gas Situation, this will be our only contact with you concerning the Yellow Page Solicitation for the area mapped below. Your business will be appreciated" (E.g., Comp. Exs. A, B, F-N, R). Below this statement on each solicitation, with only minor variations insignificant here, is the statement, "Your ad as it appears below will be published with your approval, in the next Edition of the name of a particular Yellow Page Buyers Guide and distributed in the area in the map to more than a given number of potential buyers" (id.).
These latter statements identify Respondent's circulars as solicitations and show that approval is needed for publication of the advertisement. Even though the solicitations show a typed-in dollar amount, in the context of the entire circular this amount would reasonably be understood as the cost of the advertisement if ordered, not an amount which is due or owing for previously ordered advertising. Moreover, neither the instruction to make the check payable to Respondent nor the inclusion of a tear sheet, converts the overall impression of the circular from an advertisement to a bill or invoice. Thus, despite contrary testimony of Complainant's witnesses, it is concluded that Respondent's solicitations are not in the form of and could not reasonably be construed by an ordinary reader to be a bill, invoice or statement of account due. The findings and conclusions of the Initial Decision which are inconsistent with this position and find that the circulars constitute nonmailable matter under 39 U.S.C. § 3001(d) are overruled.
Respondent contends that its advertising is protected by the First Amendment and that the issuance of a False Representation Order in the form recommended in the Initial Decision violates its First and Fifth Amendment rights under the Constitution. According to Respondent, the recommended False Representation Order is so uncertain that it fails to apprise either the enforcing postmasters or Respondent of the solicitations which are unacceptable.
As concluded by the Administrative Law Judge, false advertising representations are not protected by the First Amendment. See Donaldson v. Read Magazine, 333 U.S. 178 (1948); Public Clearing House v. Coyne, 194 U.S. 497 (1904); United States v. Athena Prods. Ltd., 654 F.2d 362 (5th Cir. 1981), cert. denied, 456 U.S. 915. Thus, there is no merit to Respondent's contrary argument.
The False Representation Order attached to the Initial Decision referred to "solicitation forms substantially similar to the exhibits attached to this order." Attached were copies of three of Respondent's advertising circulars (Comp. Exs. B, I and R).
The three exhibits attached to the recommended order, while containing variations in organization, use essentially the same basic language and the representations are otherwise similar. They are representative of the other circulars in the record on which Complainant bases the allegations of the Complaint. Thus, the reference to Complainant's Exhibits B, I and R suffices to describe the advertising which is subject to the False
Representation Order and does not violate Respondent's constitutional rights.
While the record supports the issuance of a False Representation Order in the form recommended by the Administrative Law Judge, because of the number of directories published by Respondent and differences in Respondent's advertising circulars, the difficulty of enforcement of such an order is recognized. Accordingly, the return portion of the False Representation Order will be stayed for a period of 45 days from the date of this Decision in order to allow the parties to negotiate the terms of an order which will minimize the difficulties of enforcement. In the event an agreed upon order is not filed with the Judicial Officer within 45 days, or such extended period as is requested and granted, the False Representation Order will be placed in full force and effect.
After consideration of the entire record it is concluded that to the extent indicated herein, Respondent is engaged in a scheme or device to obtain money through the mail by means of materially false representations. A remedial order under 39 U.S.C. § 3005 with a stay of the return portion is being issued with this decision.
/ The Administrative Law Judge reached his conclusions on the basis of "substantial credible evidence of record" (I.D., C.O.L. V). The standard of proof in proceedings under 39 U.S.C. § 3005 is the preponderance of evidence standard. See Telex & twx Directory, P.S. Docket No. 13/6 (P.S.D. April 1, 1983), and cases cited therein at pp. 5-7. However, in this case the same conclusion is reached under both standards with respect to paragraphs III (a) and (b) of the Complaint.