In the Matter of the Complaint Against MID-AM. MARKETING, INC. A Corporation d/b/a NASHVILLE DIRECTORY COMPANY THE NASHVILLE DIRECTORY 2120 Crestmoor Nashville, TN 37215-2513 and WADE L. WHITE, Individually R.R. 4, Box 58 Lincoln, NE 68528-8821 P.S. Docket No. 24/12; 08/28/86 Grant, Quentin E. APPEARANCES FOR COMPLAINANT: H. Richard Hefner, Esq. Alan Ostroff, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-1100 APPEARANCES FOR RESPONDENT: Richard Littell William D. Coston Bishop, Liberman Cook, Purcell & Reynolds 1200 17th Street, NW Washington, DC 20036
By a Complaint filed on May 5, 1986, the Postal Service ini tiated this proceeding, alleging that Respondents are engaged in a scheme or device to obtain money or property through the mails by means of false representations, including solicitations in the guise of bills or invoices which are nonmailable under 39 U.S.C. § 3001(d), in violation of 39 U.S.C. § 3005.
Specifically, the Complaint alleged that by means of unsolicited direct mailings to businesses requesting recipients to purchase listings a "yellow pages" directory, called the Nashville Directory, Respondents represent, expressly or impliedly, in substance and effect, by affirmative statements, implications, or omissions that
"(a) The directory which will purportedly be published by Respondents is a geographically expanded version of a directory previously published by the publisher of The Nashville Directory.
(b) The Nashville Directory will be widely circulated throughout the Nashville area to all businesses.
(c) The Nashville Directory will be published within a reasonable time of receipt of each solicitation from Respondents.
(d) Nashville Directory Company is the publisher of the classified directory or "yellow pages" normally supplied to all telephone subscribers in the recipient's area.
(e) The amount of money set forth on the statement is owing and due to Respondents by the addressee."
Complainant alleges that the foregoing representations are materially false in fact.
In paragraph 7 of the Complaint it is alleged that Respondents' direct mail solicitations also violate 39 U.S.C. § 3005 in that they are in the form of, or may reasonably be construed as, bills, in voices, or statements of account due which, not carrying the dis claimer prescribed under 39 U.S.C. § 3001(d), are nonmailable matter.
Respondents' Answer to the Complaint denies any violation of 39 U.S.C. § 3005.
A hearing was held in Washington, D.C. on June 18, 1986. Com plainant presented the testimony of Lee Bacigalupo, W. Gordon Taylor, and William Gleason all of whom testified as to the receipt of Respondents' solicitations and their perceptions thereof. Wade L. White, the individual Respondent, testified for Respondents. The parties have filed proposed findings of fact and conclusions of law all of which have been considered. To the extent indicated below, they have been adopted; otherwise, they have been rejected as irre levant or contrary to the evidence.
1. Respondent Wade L. White is an individual residing in the state of Nebraska who formulates, directs and controls the acts of Respondent Mid-Am. Marketing, Inc. and the entities known as Nashville Directory Company and The Nashville Directory (Answer, Parag. 1).
2. During the first week of April, 1986, Respondents began mailing unsolicited direct mail solicitations to businesses in the Nashville, Tennessee, area for the purchase of listings in a "Yellow Pages" directory called The Nashville Directory. The first page of these solicitations was in the form attached hereto as Exhibit A (Tr. 101; RX-1). The second page contained samples of advertising. Respondents mailed approximately 15,000 solicitations in that form (Tr. 102).
3. On or about April 7, 1986, the Postmaster at Lincoln, Nebraska, who had issued to Respondent a third class bulk rate authorization, informed Respondent White that he had been advised by Postal Service personnel in Omaha that the solicitations could be nonmailable matter because they might be construed as a bill.
Respondent White inquired what would have to be done to assure compliance with the statute and was advised by the Postmaster to place the language "This is not a bill" diagonally across the face of the solicitation or to print somewhere on the solicitation the following: "This is not a bill; this is a solicitation. You are under no obligation to pay unless you accept this offer." (Tr. 124, 125). The Postmaster did not specify the size of type that should be used for the disclaimer (Tr. 125). Immediately after receiving this advice, Respondent ordered from its printer 50,000 solicita tions containing this disclaimer and thereafter used the revised form (RX-2) except for some that were already in the hands of its mail sorting service (Tr. 125-127). The first page of the revised form of solicitation is attached hereto as Exhibit B. Approximately 35,000 of the revised form were mailed in the Nashville area (Tr. 104)
4. Contrary to instructions given by Respondents to independent contractors employed to prepare the solicitations, some solicita tions, but probably less than five percent, contained advertise- ments cut out of existing Yellow Pages directories (Tr. 154-156; CX-10, 14).
"The directory which will purportedly be published by Respondents is a geographically expanded version of a directory previously published by the publisher of The Nashville Directory."
5. Without clarification, the words "THE EXPANDED MARKET COVER AGE" in boldface just above the box on the solicitation might tend to convey this representation. However, this representation is negated by the advice below the box that the solicitation is for advertising in a new publication.
"The Nashville Directory will be widely circulated throughout the Nashville area to all businesses."
6. The words "EXPANDED MARKET COVERAGE" in boldface above the box would tend to indicate the intent of Respondents to circulate the directory widely in the Nashville area. This falls short, how ever, of making the representation alleged. The advice below the box that "the directory is an independent publication which is not part of nor associated with telephone company, household phonebook or directory" dispels the possible inference that the directory will go to all telephone subscribers or businesses, in the Nashville area.
"The Nashville Directory will be published within a reasonable time of receipt of each solicitation from Respondents."
7. The meaning of this alleged representation is not clear. Taking the representation literally, the solicitation does not make it. Taken to mean (as suggested on page 10 of Complainant's Pro posed FOF) that the directory will be published within a reasonable time after receipt of payment from businesses placing orders there for, such a representation is implicit in the solicitation. I find credible Respondent White's unrebutted testimony that he intended to publish a directory within a year after commencing solicitations and that such a period is consistent with the nine months to two years between solicitation and publication allowed by other publishers of Yellow Page directories (Tr. 133, 134)
"Nashville Directory Company is the publisher of the classified directory or 'yellow pages' normally supplied to all telephone subscribers in the recipients area."
8. This alleged representation is expressly negated by the advice contained in the solicitation that the Nashville Directory is a new, independent publication which is not part of, or associated with, the telephone company, household phone book, or directory, and that the solicitation is not a renewal notice for advertising pre sently running in any other directory. This disclaimer offsets possible confusion with the South Central Bell Yellow Pages result ing from use of the Yellow Pages and walking fingers logos, the use of yellow paper, and the use, in a small percentage of the solicita tions, of advertising xerographically copied from the South Central Bell Yellow Pages.
9. The words "Yellow Pages" and the logos used in Respondents' solicitations are not copyrighted in the United States, are in the public domain, may be used by any one, and are used by nearly all directory companies (RX-3c; Tr. 64, 146, 147, 149-151).
"The amount of money set forth in the statement is owing and due to Respondents by the addressee."
10. The solicitations contain a number of clear indications contrary to this alleged representation. They are (1) the words "ADVERTISING SOLICITATION" in boldface above the box, (2) the words
"With your approval" in the upper left hand corner of the box, (3) the authorization required of applicants at the bottom, (4) the advice appearing above the authorization lines that this is a soli citation, not a renewal notice, and that the recipient is under no obligation to advertise in this directory and that any advertising will be done only with the recipients payment and approval, and (5) the disclaimer appearing prominently in the box in the revised soli citation (RX-2; see FOF 3, supra).
11. Complainant called as witnesses three recipients of Respondents' solicitations for the purpose of proving that they contained the alleged misrepresentations and were in the form of bills or invoices.
(a) Witness Lee Bacigalupo is the controller for Thoroughbred Motor Cars in Nashville, Tennessee (Tr. 7). She does not ordinarily pay bills for the company (Tr. 8). When she first saw Respondents' solicitations (CX-1 through 5) on referral by her assistant, she thought they were renewal invoices for advertising in the South Central Bell Yellow Pages but did not read them carefully and authorized her assistant to take them to Ms. Bacigalupo's superior, Mr. Bennett, for acceptance and payment (Tr. 10, 14, 15). Mr. Bennett signed the acceptances on the five solicitations and issued checks in payment therefor (CX-6). The record does not reflect whether Mr. Bennett recognized the solicitations as being for advertising in a new directory or whether he thought he was paying invoices for advertising in the telephone company Yellow Pages.
However, he did make some ink changes in the text of the proposed advertising on four of the five solicitations. Even after reading all the disclaimers carefully, Ms. Bacigalupo was reluctant to recognize the solicitation as a solicitation rather than a bill or to concede that a reading of the entire solicitation should have persuaded her that it was not related to the telephone company's Yellow Pages directory (Tr. 32-36). This reluctance appeared to stem from her understanding that a solicitation which is accepted becomes a bill (Tr. 35, 36). Ms. Bacigalupo admitted that Respondents' solicitations were "out of the norm" and did not resemble mailings from the telephone company relating to Yellow Pages advertising (Tr. 31-32). She thought, so she testified, that they were bills for Yellow Pages advertising from an independent advertising agency (Tr. 27-30).
(b) Witness W. Gordon Taylor is the executive director of the Arthritis Foundation, Middle-East Tennessee Division, located in Nashville, Tennessee (Tr. 49). In that capacity he is empowered to authorize payment of bills for the organization (Tr. 50). On his first reading of a solicitation from Respondent, he thought it was an invoice, although not a standard invoice because it contained fine print not usually included in invoices (Tr. 61, 62). He read it a second time because he knew that his organization was billed for Yellow Pages advertising on the telephone company's monthly billing (Tr. 50, 51). On second reading, which included the fine print, he realized it was not an invoice and that it was not from the telephone company (Tr. 56, 57, 59). Consequently, he made no payment to Respondent (Tr. 63).
(c) Witness William Gleason is the accountant/bookkeeper for Loventhal Brothers, Inc., in Nashville, Tennessee, having responsi bility for paying bills for the corporation (Tr. 67). Loventhal Brothers, Inc., received twelve or thirteen solicitations from Respondent (Tr. 68, 69, 78, 79; CX-10 through 15). Mr. Gleason testified that when he saw the first six solicitations, he thought they were bills for advertisements in the South Central Bell Telephone Company's Yellow Pages directory although the bill for such advertising is normally included in the monthly bill from the telephone company which looks nothing like Respondents' solicita tions (Tr. 71, 72). Mr. Gleason compared the text of the ads proposed in the solicitations with Loventhal's ads in the telephone company's Yellow Pages and found that except for CX-10 and 14, they differed from the latter. Also he realized that the price for the ad proposed in CX-14 was many times cheaper than the same ad in the South Central Bell Yellow Pages (Tr. 82). These differences, together with a telephone call to the advertising agency for South Central Bell, led Mr. Gleason to conclude that the Nashville Directory Company was not the telephone company (Tr. 84-86). Consequently, Mr. Gleason decided not to do business with Respondent and sent no money in response to the solicitations (Tr. 84). A representative of the L. L. Berry Company, the telephone company's advertising agency, suggested that Loventhal might want to consider calling the postal inspector's office (Tr. 86, 87). Mr. Gleason acknowledged that he noticed the fine print on the solicitation but did not read it carefully, believing that it was "all the normal stuff, probably." (Tr. 89).
12. Bills, invoices, or statements of account for advertising in the telephone company's Yellow Pages in the Nashville area are generally included in the company's monthly telephone bills. They bear no resemblance to Respondent's solicitations (Tr. 27, 28, 31, 32, 51, 88).
13. Respondent's solicitations differ from invoices generally in their fine print terms, conditions, advice, and disclaimers (Tr. 61, 62).
Yellow Pages are used by businesses, organizations, and professional people for advertising purposes. It is fair to assume that the witnesses produced by Complainant are typical of employees of potential advertisers who examined Respondent's solicitations upon receipt thereof and made, or participated in, decisions about responding thereto. None of these witnesses, upon reading the entire solicitation, confused the solicitations with bills or soli citations from the telephone company for Yellow Pages advertising. The evidence is not persuasive that Thoroughbred Motorcars, which accepted the solicitations, did so in the belief that it was paying for advertising in the telephone company's Yellow Pages.
In view of the fact that the matter of advertising in Yellow Pages requires a considered business decision, it is fair to assume that responsible employees of the ordinary business receiving one of Respondent's solicitations read the entire solicitation as did at least two of Complainant's three witnesses and possibly the person
in the third company who signed the approval and issued the checks. A reasonably careful reading discloses that the solicitation does not make representations (a), (b), (d), and (e) as alleged in para graph 5 of the Complaint.
As found in FOF 7, the solicitation impliedly makes representa tion (c). However, I find credible Respondent White's unrebutted testimony that he intended to publish the Nashville Directory within a reasonable time. Complainant has, therefore, failed to prove such representation false.
The testimony of Complainant's witnesses fails to establish that they were deceived by Respondent's solicitations to the extent that they perceived them as bills, invoices, or statements of account for amounts owing. Although all three testified that their first impression was that the solicitations were bills for advertising in the Yellow Pages directory of the telephone company, Mr. Taylor and Mr. Gleason, on examining the full content of the solicitations, quickly determined that they were not related to the telephone company and were not bills. Although Ms. Bacigalupo processed the solicitations for payment by Thoroughbred Motorcars, she admitted that she did not read them carefully. There is no evidence concerning the perception of Mr. Bennett, her superior, when he signed the approvals and issued checks to Respondent. Being a careful man, according to Ms. Bacigalupo (Tr. 35), he may well have recognized the solicitations for what they were when he signed the approvals.
Complainant's case on this issue is further weakened by Ms. Bacigalupo's understanding of a bill as a solicitation or offer which is accepted. It became apparent at pages 35 and 36 of the transcript that this was her understanding and that this was what she meant when she referred to Respondent's solicitations as bills or invoices (see FOF 11(a)).
In a proceeding involving 39 U.S.C. § 3001(d), the most compell ing evidence is the solicitations themselves. TELEX & TWX DIRECTORY, P.S. Docket No. 13/6 (P.S.D. April 1, 1983). Although Respondent's solicitations contain some of the characteristics of a bill, i.e., typed-in dollar amount of the cost of the advertisement, instructions to make the check payable to "Yellow Pages," and, in a few instances, a copy of an existing advertisement, these are not sufficient in the total context of the solicitations to warrant a conclusion that they appear to be bills or invoices. The contrary and determinative indications are as follows: (a) the words "ADVERTISING SOLICITATION" in bold face above the box, (b) the requirement for the advertiser's approval set forth in the box, in the fine print, and at the bottom, (c) the advice in the fine print that this is not a renewal notice for an advertisement presently running and that the recipient is under no obligation, and (d) in most of the solicitations mailed the prominent statement in the box that this is not a bill, but a solicitation. Even without the disclaimer in the box, the other factors mentioned are adequate to identify the solicitations as being such, rather than bills. See Associated Telephone Directory Publishers, Inc., P.S. Docket No. 13/191 (P.S.D. Jan 25, 1984).
1. 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. Schaffer, 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 foregoing principles were employed in determining whether Respondents' solicitations make the representa tions alleged in subparagraphs (a) through (e) of paragraph 5 of the Complaint.
2. For the reasons set forth in FOF 5 through 10 and in the Discussion, supra, it is concluded that Complainant has not established its case by a preponderance of the reliable and probative evidence of record.
3. The Complaint is dismissed.