In the Matter of the Complaint Against RALPH J. GALLIANO 4141 North Henderson Road, Apt. 417 Arlington, VA 22203-2416 and AMERICANS FOR PHIL GRAMM IN '84 Post Office Box 597 Arlington, VA 22216-0597 and CONGRESSIONAL MAJORITY COMMITTEE 2030 North 16th Street, Suite 305 Arlington, VA 22201-2911 P.S. Docket No. 19/15; 06/13/84 Duvall, William A. APPEARANCES FOR COMPLAINANT: Sandra C. McFeeley, Esq. Timothy J. Mahoney, Esq. Law Department Consumer Protection Division United States Postal Service Washington, DC 20260-1112 APPEARANCES FOR RESPONDENT: MacKenzie Canter, III, Esq. Mark J. Diskin, Esq. Canter, Kent & Sullivan 2020 K St., NW, Suite 350 Washington, DC 20006-1806
On March 15, 1984, the General Counsel for the United States Postal Service (Complainant) filed a Complaint against Ralph J. Galliano, 4141 North Henderson Road, Apt. 417, Arlington, Virginia 22203-2416, Americans for Phil Gramm in '84, Post Office Box 597, Arlington, Virginia 22216-0597, and Congressional Majority Committee, 2030 North 16th Street, Suite 305, Arlington, Virginia 22201-2911 (hereinafter sometimes, collectively, Respondents, or, respectively, Mr. Galliano, APG-84, and CMC). It was stated that the reason for filing the Complaint was that there was reason to believe that the Respondents are conducting a scheme or device to obtain money or property through the mail by means of false representations as proscribed by 39 U. S. Code 3005. In support of the Complaint, Complainant made the following, among other, charges as set forth below in paragraphs numbered to correspond with their numbering in the Complaint
The Complaint
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2. Respondent Jalph J. Galliano is the Assistant Treasurer of CMC and he is in a position to formulate, direct and conduct the activities and practices of that Respondent as well as the activities and practices of Respondent APG-84.
3. Respondent CMC is a political action committee registered with the Federal Election Commission.
4. Respondent APG-84 is a project of the CMC. It is to that name and address that Respondents Galliano and CMC solicit contributions of money through the mail in the manner described below.
5. By means of direct mail solicitations, Respondents request members of the public to remit payments to them through the mails. Documents attached to the Complaint as Exhibits 1 and 2 are alleged to be typical examples of recent direct mail solicitations employed by Respondents. to the 6. Complainant alleges that by means of those Exhibits 1 and 2 1/ and other similar materials, Respondents represent, directly or indirectly, in substance and effect, whether by affirmative statements, implications or omissions, that:
"(a) Respondents are authorized by Congressman Phil Gramm to solicit and collect funds for his campaign to be elected to the United States Senate;
"(b) Contributors to Respondents may reasonably expect that Congressman Phil Gramm or his authorized campaign committee will receive the money that is sent to Respondents; and
"(c) In 1982 Congressional Majority Committee raised and contributed well over one-half million dollars to candidates nationwide.
7. The representations set forth in paragraph 6 are alleged to be materially false as a matter of fact.
Complainant requests that a mail-stop order as authorized under 39 U.S.C. § 3005(a)(1) and (2), and an order to cease and desist as authorized under 39 U.S.C. § 3005(a)(3) be issued against Respondents.
Respondent's Answer
Respondent answered the foregoing charges, and alleged affirmatively, as follows:
2. Paragraph 2 is admitted to the extent that the address of Respondent Ralph J. Galliano is 4141 North Henderson Road, Apt. 417, Arlington, Virginia 22203-2416. All other averments of Paragraph 2 are denied.
3. Admitted.
4. Compound averments and therefore denied.
5. Compound averments and therefore denied.
6. Denied.
7. Denied.
First Affirmative Defense
Improper Joinder of "Americans for Phil Gramm in '84" as a party respondent.
Second Affirmative Defense
The Complaint deals with speech that is protected under the First Amendment and therefore fails to state a claim upon which relief can be granted.
Third Affirmative Defense
An administrative hearing before the United States Postal Service is not the proper forum to determine the First Amendment rights of respondents.
Respondents conclude their Answer by requesting that the Complaint be dismissed with prejudice, that Complainant's request for issuance of the orders attached to the Complaint be denied, and that respondents be awarded attorneys' fees.
Findings of Fact will be numbered serially. Support from the record will be cited or quoted, or both, following each finding.
1. The Congressional Majority Committee was incorporated as a non-stock corporation under the laws of the Commonwealth of Virginia. (Comp. Ex. 7 is a Certificate of Incorporation, Comm. of VA.)
2. The Certificate of Incorporation of CMC (including the accompanying articles) were issued on April 17, 1981, by the State Corporation Commission, and they were recorded in the Office of the Clerk of the Circuit Court, Fairfax County, Virginia, on 27 April, 1981. (id.)
3. In the Articles of Incorporation of CMC, the name and address of the Chairman are shown as follows:
Chairman:
Ralph J. Galliano
1021 Arlington Boulevard
Arlington, Virginia 22209
4. In the Answer to the Complaint in this proceeding, it is admitted that the present address of Mr. Galliano is 4141 North Henderson Road, Apt. 417, Arlington, Virginia 22203-2416. (Ans., par. 2)
5. In the annual report of CMC dated 13 July 1983, filed with the Commonwealth of Virginia - State Corporation Commission, it is stated that Ralph J. Galliano, of the address shown in F.F. No. 4, above, in addition to being the Chairman of CMC, is also the Executive Director thereof. (Comp. Ex. 8)
6. John Gizzi, 301 C Street, S.W. #713, Washington, DC 22024 is listed as the Secretary/Treasurer of the CMC. Mr. Gizzi's name does not appear on the 1982 report. (Comp. Ex. 8)
7. Respondent Congressional Majority Committee is a political action committee registered with the Federal Election Commission. Its address is 2030 North 16th Street, Suite 305, Arlington, Virginia 22201-2911. (Ans., par. 3, admitting Complt. par 3)
8. Respondents represent that Americans for Phil Gramm in '84 is an independent project of CMC. (App. A., p. 1 letterhead)
9. Business reply envelopes are included with the solicitation letter. These envelopes are intended to be used to send contributions to APG-84, and these envelopes are addressed as follows:
"AMERICANS FOR PHIL GRAMM IN '84
Attention: Jalph J. Galliano, Chairman,
c/o Congressional Majority Committee
Post Office Box 597
Arlington, VA 22216" (App. A 2/, p. 11)
10. Respondents purport to solicit support and funds to assist Congressman Phil Gramm in his campaign to become a member of the United States Senate.
"Realizing the awesome importance of electing a conservative Senator in Texas this year and maintaining conservative Republican control of the U.S. Senate, we have launched a special independent project of the Congressional Majority Committee called 'Americans for Phil Gramm in '84.' Its sole purpose is to do everything possible to insure the election of Phil Gramm to the United States Senate."
(Emphasis in original; App. A, p. 4, 5th Compl. par.)
"As Chairman of 'Americans for Phil Gramm in '84', I'm asking you to help me kick off this most important campaign. Your support at this time is absolutely essential if we are to have the maximum victory this fall."
(App. A, p. 6, 1st compl. par.)
"If you could possibly send 'Americans for Phil Gramm in '84' a contribution of $100, $250, $500, or even more, it would go a long way toward helping launch this all-important project. If you can't send that much, $15, $25, $50, or any amount at all would still be a big help."
(App. A, p. 6, 6th compl. par.)
THE USE OF THE MAIL
11. In the course of, and in connection with the making of solicitations as stated above in F.F. 10, Respondents use and cause the use of the United States mails.
At the hearing, it was stipulated on behalf of Respondents that "thousands" of letters of solicitation such as, or similar to Comp. Ex. 4, together with business reply envelopes enclosed therein, were mailed by Respondents in November 1983, and in January, February and March, 1984. (Tr. 20-21, 187; App. A, p. 11)
12. The envelopes in which were mailed the solicitation letters and other items, including the business reply envelopes, bear the return address --
"AMERICANS FOR PHIL GRAMM IN '84
2030 N. 16th St., Suite 305, Arlington, VA 22201"
(App. A, p. 11)
13. Respondents have used at least two versions of the solicitation letter to contact persons to ask them for their support and financial aid in connection with the candidacy of Congressman Gramm for the Senate. All of the letters contained certain enclosures, including an original or a copy of a folder on the front of which is a picture of Congressman Gramm with President Reagan (App. A, pp. 7, 8), a copy of an article about a telegram from a number of Senators urging Congressman Gramm to run for the Senate seat being vacated by Senator Tower (App. A, p. 9), a membership acceptance and membership card in AMERICANS FOR PHIL GRAMM IN '84 (App. A, p. 10), the business reply envelope, and the envelope containing the foregoing items (App. A, p. 11).
14. In November 1983, Comp. Ex. 2 was the form of the solicitation letter then in use. The lower margin of the first page of the letter contained the statement:
Paid for and authorized by the Congressional Majority Committee. Not prepared or mailed at government expense.
15. In January and February of 1984 and again in April 1984 Respondents mailed to Texas addressees a slightly revised version of the same solicitation letter. Respondents' counsel stipulated that about two hundred thousand letters were sent altogether. (Comp. Ex. 3 and App. A; Tr. 187) These more recent versions of Respondents' letter contain in the lower margin of page 1 the following statements:
Paid for by the Congressional Majority Committee. Not authorized by any candidate or candidate's committee. (Comp. Ex. 3 and App. A)
Do Respondents Make the Representations Charged?
16. Respondents make the representations set forth in paragraphs 6(a), (b), and (c) of the Complaint as will be as in in regard to each representation by quoting it and discussing the evidence in the record which supports this finding.
"(a) Respondents are authorized by Congressman Phil Gramm to solicit and collect funds for his campaign to be elected to the United States Senate."
This representation is made by implication in all three versions of Respondents' mailing piece. Several features contribute to the overall message that Phil Gramm authorized the mailing. The outside envelope shows the sender to be Americans for Phil Gramm in '84 and tells the recipient that an "official" membership card is enclosed. The six-page letter, the folder with Gramm's photographs, and the membership acceptance card repeat the APG-84 banner and the sole purpose, the election of Gramm to the Senate. Indeed, that purpose is expressly and prominently stated on the folder. See, e.g., App. A, p. 8. The ordinary reader could easily confuse the name of Gramm's official committee "Friends of Phil Gramm" with Respondent APG-84. From the text and format, the ordinary reader would believe that the candidate had authorized the fundraising activity announced by Respondents' mailing pieces.
In the November mailing (Exhibit 2), APG-84 is identified somewhat ambiguously as "an independent project of the Congressional Majority Committee," but there is nothing that clearly states CMC's independence from the authorized Gramm campaign. The more recent letters bear at the bottom of the first page, in smaller type than the main text, the legend quoted above in Finding No. 15, which is required by 2 U.S.C. § 441(d)(a)(3) and 11 CFR 110.11(a)(1)(iii). There are other oblique references, such as the one phrase buried in the second full paragraph of the letter's fifth page, to the claim that APG-84 is "operating independently of Phil Gramm and his committee". These disclaimers fail to come to the attention of the ordinary reader and do virtually nothing to offset the overall tenor and the ever-present insinuation and suggestion of the solicitation, namely, that it is authorized by Gramm or his official campaign committee.
"(b) Contributors to Respondents may reasonably expect that Congressman Phil Gramm or his authorized campaign committee will receive the money that is sent to Respondents."
This representation, also, is made by implication in Respondents' mailing pieces. As reviewed in Finding of Fact No. 16(a), Respondents' assertions of the independence of APG-84 fail to make clear whether the project is independent of CMC or of Congressman Gramm, or both, or either.
Each letter emphasizes the cost of the campaign and the importance of starting early to raise funds to conduct the campaign. The reference on pages 4 - 6 of the solicitation letters to how much money "We" need and how "We" will allocate the expenditures are ambiguous, in light of the overall impression that APG-84 is a Gramm-authorized activity. And in that light, such ambiguity is deceptive. Respondents repeat that a contributor will be an official member of APG-84 and they urge that each contributor or supporter carry the official membership card "in your wallet as a symbol of your strong, early support of Congressman Phil Gramm's election to the U. S. Senate." (App. A, p. 5, 9th complete par.) The message, a corollary to the authorization by Congressman Gramm, is that funds collected by APG-84 will be spent by Gramm's campaign committee as Gramm may direct.
There is additional evidence of the fact that Respondents' solicitation letters lead the addressees of such letters to believe that Respondents make the representations stated in paragraphs 6(a) and 6(b) of the Complaint. That evidence is now discussed.
Response Analysis Corporation (Response), of Princeton, NJ, is engaged in the business of market and survey research. Dr. Paul A. Scipione (Curr. Vit., Comp. Ex. 32), Vice-President of the above company, designed and prepared a survey, the purpose of which was "to obtain a sample of adult residents of the State of
Texas and to measure or to observe their understanding of the nature of App. A ; what the primary message and secondary messages of this direct mail piece are as to whether or not the direct mail piece requests funds for the election of Congressman Phil Gramm, and as to the nature of the linkage between Phil Gramm, the candidate, and the committee, Americans for Phil Gramm in '84." (Tr. 53) Based upon the record, it is found that the survey is of sound and scientific design, intended to produce unbiased answers. (Tr. 53-66; Comp. Ex. 43) Response then contacted interviewing facilities, previously known to Response as being reputable, and another organization located in San Antonio that was listed as a bona fide interviewing organization, and which is a member of the Market Research Association. (Tr. 67) Following the instructions (Comp. Ex. 35) prepared by Response, representatives of these interviewing concerns interviewed a total of 151 persons of the age of 18 and older in a shopping mall in each of the three cities, as follows: 50 persons in Dallas; 51 in Houston; and 50 in San Antonio. (Comp. Ex. 37, Table 1) The complete results of the survey are tabulated in Complainant's Exhibit 37.
It was brought out on cross-examination that while the salutation of Appendix A is "Dear Conservative Texan," there were no questions in the survey which, when answered, would necessarily reveal whether the addressee was conlrvative, moderate, or liberal. Similarly, the survey did not, so far as is known or shown, include rural citizens of Texas, nor the elderly or other categories of persons that could be suggested. These factors, however, beg the question because the purpose of the survey was to determine how average people would interpret the language used in Appendix A - not to determine the accuracy of Respondents' mailing lists. The fact that a letter starts with "Dear Conservative Texan" is by no means a guarantee that the recipient of the letter is, in fact, a conservative Texan. By the same token, there is nothing in the record to suggest that a group of addressees as identified by Respondents' counsel in cross-examination of Dr. Scipione would have interpreted the non-political issues of authorization and spending decisions any differently than did the actual survey respondents.
In answer to question 6 of the survey, 74% of the persons interviewed agreed that APG-84 is authorized by Phil Gramm to collect funds for his campaign. Exhibit 37, Table 8. In answer to the question (#4 on the questionnaire) who do you think is going to make the decision as to how this money sent to APG-84 will be spent, 8% answered "Phil Gramm." There were additional answers to this open-ended question: 4% said "Ralph Galliano" and 22.8% said "Americans for Phil Gramm." Of the 26.7% (n = 27) "other" responses, 19 could fairly be said to identify Phil Gramm or his committee as the decisionmaker for expenditures. They included "campaign manager," "the financial guy from the Campaign," "Phil Gramm Treasury," and "representative for Phil Gramm." Exhibit 37, table 6; Exhibit 38. Thus, while it is not necessary to produce evidence to show that large numbers of consumers believe that Respondents' solicitation materials make the representations alleged in paragraphs 6(a) and 6(b) of the Complaint, there is an abundance of such evidence available.
The last of the representations alleged by Complainant to be made by Respondents is found in paragraph 6(c) of the Complaint as follows:
"(c) In 1982 Congressional Majority Committee raised and contributed well over one-half million dollars to candidates nationwide."
The following language is found, verbatim, in Complainant's Exhibits 2 (p. 12), 3 (p. 7) and App. A (p. 7) under the caption "CONGRESSIONAL MAJORITY COMMITTEE":
"* * *
"In 1982 CMC raised and contributed well over one-half million dollars to candidates nationwide.***"
Thus, the language of the representation appears in an enclosure with each of the various solicitation letters.
Are The Representations Material?
17. All three representations alleged in the Complaint are material. The representation that Phil Gramm has authorized Respondents' fund raising activity gives the enterprise an aura of authority, credibility, and purpose. It would be a major factor in the recipient's decision to send a contribution. The second representation, that Phil Gramm or his official campaign committee will decide how to spend the funds raised by Respondents' solicitation, is a corollary of the first. Prospective donors are much more likely to contribute to support a candidacy if they believe the funds will be spent by that candidate. The third representation, that CMC raised and contributed over half a million dollars to candidates in 1982, is material on two grounds. It adds credibility and stature to the entirety of Respondents' fundraising activity by advertising CMC's past success. Moreover, it supports both the claim of authorization and, more important, the claim that funds collected will in fact be directed to the named candidate.
The Truth or Falsity of the Representations
18. Because they are so closely interrelated, the truth or falsity of the representations set forth in paragraphs 6(a) and 6(b) of the Complaint will be considered together. These representations, in substance, are that Congressman Gramm authorized the Respondent to solicit and collect funds for his Senatori Campaign, and that persons sending contributions to
Respondents in response to the latters' solicitations may reasonably expect that Congressman Gramm or his authorized campaign committee will receive those contributions. These representations heretofore found to have been made are false.
The hearing in this proceeding was held on May 4, 1984, only a short time before the primary election in Texas in which Congressman Gramm was a candidate for selection as a candidate for the Senate of the United States. Since it would have been very inconvenient and impractical for him to come to Washington, D.C. to testify at that particular time, and since the parties stipulated that an affidavit by Congressman Gramm dated April 25, 1984, might be admitted into evidence at the hearing, subject to the reservation by Respondent of the right to argue that the affidavit has no probative value, Congressman Gramm's affidavit was received into the record as Complainant's Exhibit 1.
The following excerpts from Congressman Gramm's affidavit of April 25, 1984, are dispositive of the issue of the truth or falsity of the representations alleged in paragraphs 6(a) and 6(b) of the Complaint and made by Respondents in their solicitation letters.
"5. During the past several months, I have become aware of an organization called Congressional Majority Committee, which is using the name, 'Americans for Phil Gramm in '84,' ('APG-84') to solicit funds.
"6. Neither Congressional Majority Committee nor APG-84 is authorized by me. I am not responsible for the activities of Congressional Majority Committee or its so-called 'independent project,' APG-84. Consequently the funds contributed to this committee will not be spent under my direction and control. (Ex. 1, p. 2)
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"9. On approximately November 16, 1983, I telephoned Ralph Galliano at the telephone number shown on Exhibit 2 and directed him not to use my name in, or in connection with, any solicitations made to members of the public.
"10. From November 1983 through February 1984, I requested Mr. Galliano on at least three occasions to cease using my name to solicit funds. He flatly refused and said there was no way I could make him do so. (Ex. 1, p. 3)
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"12. I have recently asked my authorized campaign committee to review its contributor list to determine whether APG-84 or the Congressional Majority Committee has ever given any money or other contribution to my campaign. If I receive from Mr. Galliano or APG-84 any contributions, whether in cash or in kind, I will refuse or return them immediately." (Ex. 1, p. 4)
It is repeated that 74 per cent of the persons interviewed in the survey believed that Congressman Gramm authorized APG-84 to collect funds for his campaign. When these same people answered as to the identity of the person or group who would decide how the contributions inc to collected would be spent, 8 per cent said "Phil Gramm"; 22.8 per cent said "Americans for Phil Gramm"; and the response of 19 out of 27 who answered "other" gave answers that reasonably could be interpreted to mean Congressman Gramm or his committee. (F.F. 16, supra) In the face of this formidable body of evidence, Mr. Galliano testified that he never contended that CMC was authorized by Congressman Gramm to solicit and collect funds for his campaign. Mr. Galliano also testified that his solicitation letters neither say nor imply that contributors to CMC can reasonably expect that Congressman Gramm or his authorized campaign committee would receive the money sent to Respondents. (Tr. 178-179) The evidence as to the truth or falsity of the charges stated in paragraphs 6(a) and 6(b) of the Complaint requires the finding that these representations are false.
There remains to be considered whether it is true or false that in 1982 CMC raised and contributed over $500,000 to candidates nationwide.
CMC's own reports to the Federal Election Commission show that its 1982 receipts, which include contributions made by individuals and others to it, totaled less than $61,000 (Ex. 27, p. 1; Ex. 28). CMC's 1982 total disbursements reported to the F.E.C. were $62,921.15 (Ex. 27, p. 2) of which $9,878.73 represented transfers to affiliated or other party committees. There were no amounts listed as contributions to federal candidates and other political committees (Ex. 27, p. 2).
In paragraph 2 of his affidavit (Comp. Ex. 40) Mr. Galliano makes the following statements:
"2. CMC supported 53 candidates for the House and Senate in 1981 - 1982 election cycle with in-kind and direct contributions and fundraisers totaling $521,366.72. In-kind and direct contributions came to $10,866.72. Additionally, CMC sponsored and co-sponsored fundraising receptions for 18 Congressional candidates and raised $510,500.00 in the process (See Exhibit B)."
It should be noted that the caption to Exhibit B to the affidavit indicates that the figures presented thereon represent the results of only one year - 1982. Mr. Galliano's explanation of the figures shown in the Exhibit B to his affidavit was to the effect that the $510,500 in contributions resulting from fundraisers that
CMC "helped" need not be reported to the FEC. (Tr. 169-170) Without regard as to whether Respondents' legal conclusion is correct, under the existing circumstances, it clearly is a misrepresentation to state that those "over one-half million dollars" were "prizes and contributed" to candidates as Respondents stated in the APG-84 material.
Complainant offered the testimony of Saunders Bridges, Jr., who in 1982 was the assistant treasurer of the official campaign committee to elect John Napier to Congress from the sixth district of South Carolina. Respondent Galliano's affidavit identified contributions of over $103,000 (20% of the "over one-half million" alleged to have been raised and contributed that year) made to the Napier campaign. Mr. Bridges testified that CMC had not been engaged to raise money for Napier and that he was aware of no contributions of that magnitude coming from CMC or anyone connected with it. (Tr. 25, 26, 30, 40) Mr. Galliano's testimony contradicted his affidavit by attributing the $103,000 to two years' efforts. (Tr. 177)
The Napier committee had engaged John Gizzi to assist in a Washington reception and had paid him $1,500 for his services. (Exhibit 41, Sched. B, p. 3 of 19; Tr. 26, 30) Exhibit 8 identifies Mr. Gizzi as an officer and director of CMC in 1983 but not in 1982. See, also Tr. 176.
The evidence supporting 1982 receipts and disbursements of approximately $61,000 consists of Respondent CMC's filings with the Federal Election Commission which were each signed by Respondent Ralph J. Galliano. In addition, the claimed beneficiary of twenty percent of Respondent's half million dollars in 1982, received nothing from CMC and received only fully compensated fund raising assistance from an individual who is associated with CMC as a director but not as an employee. Respondents' evidence on this issue consisted of Respondent Galliano's affidavit filed in a federal court action to enjoin this administrative proceeding and his unsupported assertion that he need not report the kinds of fund raising that constitute the claimed half-million dollars. If, as Respondent asserts, the $510,000 in funds raised need not be reported to the FEC because it was not contributed to CMC but directly to "candidates nationwide," then it is false to so advertise in Exhibits 2, 3 and 4.
1. Each of Respondents' solicitation letters is to be considered as a whole and the meaning is to be determined in light of the probable impact of this material on a person of ordinary mind. Donaldson v. Read Magazine, 333 U.S. 178, 189 (1948); Peak Laboratories, Inc. v. U.S. Postal Service, 556 F.2d 1387, 1389 (5th Cir. 1977). The impression of promotional representations on the ordinary mind generally is a question for the presiding officer to determine and testimony on interpretation is not required, but it is within the discretion of the judge to permit such testimony. Vibra-Brush v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2nd Cir. 1958). Express misrepresentations are not required. It is the net impression which the advertisement as a whole is likely to make upon individuals to whom it is directed which is important, and even if a solicitation is so worded as not to make an express representation, if it is artfully designed to mislead those responding to it, the false representation statute is applicable. G. J. Howard Co. v. Cassiaey, 162 F. Supp. 568 (E.D.N.Y. 1958); See also, Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748 (1976). In the last cited case, also, it was said (fn. 24, on p. 772) in a quotation from United States v. 95 Barrels of Vinegar, 265 U.S. 438, 443 (1924), that:
"It is not difficult to choose statements, designs and devices which will not deceive."
To the same point, it was said in Rhodes Pharmacal Co. v. Federal Trade Commission, 208 F.2d 382, 387 (7th Cir. 1953):
"The important question to be resolved is the impression given by an advertisement as a whole. Advertisements which are capable of two meanings, one of which is false, are misleading ***. Advertisements which create a false impression, although literally true, may be prohibited."
2. Applying the foregoing standards, it is concluded that many persons of ordinary minds who read Respondents' solicitation letters would interpret them on the crucial points substantially as they are expressed in the representations stated in paragraph 6 of the Complaint.
3. A good rule to follow to decide whether a representation is material was expressed in Chaachou v. American Central Insurance Co., 241 F.2d 889, 893 (5th Cir. 1957) where it was said that to be material the representation must
"***cause the other party to do other than that which would have been done had the truth been told."
Following this rule, it is concluded that the representations herein found to have been made by Respondents are material.
4. The material representations made by the Respondents are false.
5. The Complainant has established its case by the preponderance of the competent and probative evidence.
6. The accurately reported findings of a properly designed, carefully and fairly conducted survey are admissible in evidence for the reason, among others, that they are within the exception to the hearsay rule with respect to present state of mind of the persons interviewed in the survey. United States v. 88 Cases, More or Less, Containing Bireley's Orange Beverage, 187 F.2d 967, 974, C.A. 3 (1951); Randy's Studebaker Sales, Inc. v. Nissan Motor Corp. in U.S.A., 533 F.2d 510, 520-521 (1976); Zippo Mfg. Co. v. Rogers Imports, Inc., 216 F. Supp. 670, 682 (1963).
7. The Respondents in this proceeding are conducting a scheme for obtaining money or property through the mails by means of materially false representations within the meaning of 39 U. S. Code 3005.
First
Respondents alleged as a defense that "Americans for Phil Gramm in '84" was improperly joined as a party respondent in this proceeding. The name "Americans for Phil Gramm in '84" is one of the names used in the conduct of what has been found to be a scheme or device for obtaining money or property through the mails by means of false representations within the meaning of 39 United States Code 3005. Hence, the name is a proper subject of a proceeding under the statute to put an end to the operation of the scheme. This is one way to carry out the purpose of the statute, stated many times, which is to protect the public and not to punish the offender. Lynch v. Blount, / for F. Supp. 689, 693 (S.D.N.Y. 1971), aff'd. 404 U.S. 1007 (1972).
Second
The second affirmative defense is that the Complaint deals with speech that is protected under the First Amendment and therefore fails to state a claim upon which relief can be granted.
The Supreme Court of the United States had a word to say concerning this argument. In Virginia State Board of Pharmacy, supra, the Court said at p. 771: "Untruthful speech, commercial or otherwise, has never been protected for its own sake." (Citations omitted)
Third
The last affirmative defense alleged by Respondents is that "An administrative hearing before the United States Postal Service is not the proper forum to determine the First Amendment rights of respondents."
There is complete agreement here with the above argument. There is no sentiment in the Postal Service to do that to which Respondents object, and certainly no such action was attempted, contemplated, or taken during the entire course of the proceeding. What has been done pursuant to statutory mandate is that effort has been made to prevent persons from falling victims to Respondents' scheme to obtain money through the mail by means of false representations. In this undertaking, it is the view of the undersigned that the Complainant has succeeded.
Proposed findings of fact and conclusions of law submitted by the parties have been fully considered, and to the extent indicated herein, they have been adopted. Otherwise such proposed findings of fact and conclusions of law are rejected for the reasons stated or because they are unsupported by, or contrary to the evidence, or because of their irrelevance or immateriality.
Accordingly, a mail-stop order as authorized by Section 3005 (a)(1) and (2), and a cease and desist order as authorized by Section 3005 (a)(3) of Title 39, United States Code, substantially in the forms attached, should be issued against this Respondent.
1/ Exhibit 2 to the Complaint is identical with Ex. 4 received in evidence. A copy of Ex. 4 as received in evidence is attached hereto as Appendix A.
2/ Respondents used other solicitation letters, but the body of the other letters (Comp. Ex. 2 and 3) is very similar to that of App. A which is the solicitation letter most recently used.