Appeal of P.S. Docket No. 19/160 -- CAROL LEE d/b/a, VIDEOPLEX, and AMERICAN VIDEO


 In the Matter of the Complaint Against

 CAROL LEE d/b/a, VIDEOPLEX,
 P. O. Box 2204
 New York, NY 10116-2204

 and
 AMERICAN VIDEO,
 P. O. Box 2085
 New York, NY 10116-2085

 P.S. Docket No. 19/160

 02/04/85

 Grant, Quentin E.  Administrative Law Judge

 APPEARANCES FOR COMPLAINANT:
 H. Richard Hefner, Esq.,
 Brendan J. O'Brien, Esq.,
 Consumer Protection Division,
 Law Department,
 United States Postal Service,
 Washington, DC 20260-1100 

 APPEARANCE FOR RESPONDENT:
 Ephraim London, Esq.,
 8 Washington Mews,
 New York, NY 10003-6608,

INITIAL DECISION

The Complaint in this matter alleges that Respondent Carol Lee, employing the names Videoplex and American Video, seeks remittances of money through the mails, in violation of 39 U.S.C. 3005, by means of false representations contained in advertising circulars for the purchase of video cassettes. The specific representations alleged to be materially false are (a) that purchasers will receive complete and full length VHS or BETA tapes of the movies described in the solicitations and (b) that purchasers will receive an individual VHS or BETA cassette of each movie ordered.

Respondent's Answer to the Complaint denied all the allegations of the Complaint except the allegation of paragraph 2 that the advertising circulars attached to the Complaint are typical of those used to attract attention to the alleged scheme.

A hearing was held in New York City on November 20, 1984. Complainant presented the following three witnesses who testified to purchases, or attempted purchases of the advertised video cassettes: Harry Bowens, Bernard Mitzner, and Margaret Noel. Respondent produced no witnesses.

The parties have submitted proposed findings of fact and conclusions of law, all of which have been considered. To the extent indicated they have been adopted. Otherwise they have been rejected as irrelevant, immaterial, or contrary to the evidence.

FINDINGS OF FACT

1. Carol Lee, doing business as Videoplex and American Video at the addresses set forth in the caption hereof, by means of advertising circulars typified by those attached to the Complaint solicits remittances of money to such addresses for video tapes of certain movies (CX-A, A-1, B, B-1; Tr. 39, 40).

2. Videoplex and American Video are assumed names of Farragut Research Corp. to the account of which two of the checks in evidence (CX-D, E) were deposited (RX-1, 2; Stip. at Tr. 59, 60). Carol Lee is the holder of the account of Farragut Research Corporation in the bank in which such checks were deposited (Tr. 39, 40).

3. Copies of advertising circulars employed by Respondent d/b/a Videoplex (CX-A, A-1) and American Video (CX-B, B-1) are attached hereto.

4. The representations alleged in the Complaint are found in the individual cassette containers depicted for each advertised movie (CX-A, A-1, B, B-1) taken together with the following language employed in the advertisements:

YES] THREE FEATURE PRESENTATION FULL COLOR FIRST RUN VIDEO GEMS . . .

THAT'S LESS THAN $20 FOR EACH]

Pick one of the four sets of 3 . . . features . . .

And if you want all four sets of 12 features . . .

(CX-A-1)

THE MOST INCREDIBLE VIDEO OFFER EVER MADE]

* * * 10 of the Best for One Incredible Low Price

(CX-B-1)

LOOK] You get TEN first run, full color

* * * video features ALL for only $59.00

All ten for just $59.00

(CX-B)

Enclosed is $59.00 for all ten of the full color video features.

(CX-B-1)

5. The alleged representations are even more strongly made in the American Video order blank which lists the ten features included in the offer with a box before the title of each feature for choice of VHS or BETA format (CX-B-1).

6. Each of the feature films advertised by Respondent runs, in full length, from 60 to 90 minutes (Tr. 49, 50).

7. Complainant's witness Harry Bowens responded to the Videoplex offer, ordering all 12 features and enclosing his check for $149.95, believing he would receive a separate cassette for each feature (Tr. 10-12, 14, 15). He received 4 cassettes each of which contained only excerpts of the full length features, each excerpt running 10 to 20 minutes (Tr. 13, 15, 16, 17). Mr. Bowens had previously ordered video films from other companies and always received a separate cassette for each (Tr. 19).

8. Complainant's witnesses Bernard Mitzner, a research chemist, and Margaret Noel, the operator of a video store, each responded to the American Video offer of ten features for $59.00 believing they would receive a separate cassette for each feature (Tr. 31, 49). Mr. Mitzner received a blank tape (Tr. 34). Ms. Noel received a single cassette containing only a 10 to 20 minute "clip" (excerpt) from each feature (Tr. 48, 49, 56; CX-F).

CONCLUSIONS OF LAW

1. I find that Carol Lee does business as Videoplex and American Video based on the following: the hearsay testimony of Bernard Mitzner that Carol Lee is the holder of the American Video/Farragut Research Corp. account in the Leumi Trust Co., in which his check drawn to American Video was deposited (Tr. 39), as corroborated by (a) the telephone conversation Mr. Mitzner had using the telephone number for Carol Lee supplied by the Leumi Trust Co. (Tr. 39-41); (b) the certificates of assumed name (Farragut Research Corp. as Videoplex and American Video) introduced by Respondent (RX-1, 2); (c) the stipulation by Respondent's counsel that if a cease and desist order is entered against Respondent Carol Lee it may also be entered against Farragut Research Corp. and the inference permitted by Carol Lee's failure to testify that, if honestly given, her testimony as to her doing business as Videoplex and American Video would have been unfavorable to her case (2 Wigmore, Evidence 289, Chadbourn rev. 1979). Carol Lee was present at the hearing.

2. The meaning of advertising representations is to be judged from a consideration of an advertisement in its totality and the impression it would most probably create in ordinary minds. Donaldson v. Read Magazine, 333 U. S. 178 (1948); Vibra-Brush Corp. v. Shaffer, 152 F. Supp. 461 (S.D.N.Y. 1957); Borg-Johnson Electronics v. Christenberry, 169 F. Supp. 746 (S.D.N.Y. 1959). Express representations are not required. It is the net impression which the advertisement is likely to make upon purchasers to whom it is directed which is important, and even if an advertisement is so worded as not to make an express representation, if it is artfully designed to mislead those responding to it the mail fraud statutes are applicable. G. J. Howard v. Cassidy, 162 F. Supp. 568. See also Virginia State Board of Pharmacy v. Virginia Citizens Council, 425 U. S. 748 (1976).

The ultimate impression on the reader results not only from what is stated but also from what is reasonably implied from an advertisement. Vibra-Brush Corp. v. Shaffer, supra; Aronberg v. Federal Trade Commission, 132 F.2d 165 (7th Cir. 1942).

The foregoing principles were applied in finding that Respondent's advertising makes the representations alleged in paragraph 3 of the Complaint.

3. The ordinary person who reads Respondent's advertising circulars would interpret them substantially as characterized in paragraph 3 of the Complaint.

4. Based upon findings of fact numbered 6, 7 and 8, supra, such representations are false in fact.

5. Complainant has proved its case by a preponderance of the reliable and probative evidence of record.

6. Respondent is engaged in the conduct of schemes for obtaining money or property through the mails by means of materially false representations in violation of 39 U.S.C. 3005. Accordingly, a mail stop order and a cease and desist order in the forms attached should be issued against the Respondent.