In the Matter of the Complaint Against J. W. ARTHUR, 2906 Briarcroft, San Antonio, TX 78217-3801 and PRINTER'S CLEARING HOUSE, INC. and U.S. BUSINESS PRINTERS, 8610 N. New Braunfels, San Antonio, TX 78217-6356 and P. O. Box 33910, San Antonio, TX 78265-3910 P.S. Docket No. 20/85 December 23, 1987 James A. Cohen Judicial Officer APPEARANCE FOR COMPLAINANT: Sandra C. McFeeley, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-1144 APPEARANCE FOR RESPONDENTS: Gregory P. Seale, Esq. Ausburn, O'Neill & Associates, P.A. 11230 West Avenue, Suite 1205 San Antonio, TX 78213-1359
On July 20, 1987, Complainant filed a Petition alleging that Respondent J. W. Arthur (or James W. Arthur) has breached the terms of a Consent Agreement executed by him on April 18, 1985. According to Complainant, J. W. Arthur acting through and in cooperation with his son James A. Arthur, certain other individuals, and two newly formed corporations, Georgio Freight Forwarders, Inc. (Georgio) and JJMJJ Investments, Inc. (JJMJJ) doing business as Marketing Survey Associates (Marketing), has resumed the promotional activities which he agreed to permanently discontinue and abandon. The names and addresses Complainant contends Respondent is currently using and against which the Orders authorized by the Consent Agreement are requested are:
Marketing Survey Associates
11417 West Avenue, Suite 161
San Antonio, TX 78213-1342
Marketing Survey Associates
2615 Broadway
San Antonio, TX 78215-1022
Marketing Survey Associates
P. O. Box 12500
San Antonio, TX 78212-0500
Marketing Survey Associates
132 W. Grayson
San Antonio, TX 78212-0500
Georgio Freight Forwarders, Inc.
P. O. Box 12600
San Antonio, TX 78212-0600
Georgio Freight Forwarders, Inc.
11417 West Avenue, Suite 162
San Antonio, TX 78213-1342
Georgio Freight Forwarders, Inc.
132 West Grayson
San Antonio, TX 78212-0500
On July 22, 1987, an Interim Detention Order, as authorized by paragraph 3 of the Consent Agreement, was issued directing the detention of mail to the above names and addresses. The Interim Detention Order provided that Respondent could inspect the outside cover of all detained mail and have possession of all mail not related to the sale or distribution of boats and motors, advertising specialty products or vacations.
The Interim Detention Order also granted Respondent a period of ten (10) days in which to file a reply to the Petition. On August 6, 1987, a reply was filed on behalf of J. W. Arthur, Printer's Clearing House, Inc., and U.S. Business Printers (hereinafter collectively referred to as Respondent). In the reply, Respondent denied that the Consent Agreement has been breached or that the Orders sought in the Petition should be issued. In addition, Respondent requested that a hearing be held in San Antonio, Texas.
By the terms of the Consent Agreement, Respondent J. W. Arthur, the "owner or principal officer" of Printer's Clearing House, Inc. and U.S. Business Printers (Printers), agreed that
"1. The use of the aforementioned promotional activities and representations (as specifically recited in paragraphs 2-5 of the Complaint) for obtaining money or property through the mails has been and will be permanently discontinued and abandoned, and will not hereafter be resumed, directly or indirectly, under any name or names or through any corporate or other device."
In paragraph 3 of the Consent Agreement, Respondent J. W. Arthur further agreed that "[a] breach of the Agreement by the undersigned [J. W. Arthur] or any party in privity with the undersigned will warrant the issuance of an Order pursuant to 3005 against the names(s) appearing in the caption hereof, or any other name or names then in use...." Respondent also agreed that if a petition was filed alleging breach of the agreement, the Judicial Officer was authorized to issue an order directing the detention of mail addressed to the names currently being employed, pending final resolution of the issue concerning the alleged breach. Finally, Respondent agreed that the determination to issue a False Representation Order could be made without an evidentiary hearing or oral argument, unless otherwise required by the Judicial Officer.
The promotional activities and representations referred to in paragraph 1 of the Consent Agreement which Respondent agreed to discontinue were described in the Complaint, as amended, as follows:
"2. Respondents attract attention to said scheme by means of letters sent as certified mail that inform the recipients that they have been selected to receive a 'Clearwater Sports Fishing Boat and Motor.' The letters urge the recipients to telephone the number listed in order to claim the boat and motor.
3. Copies of the letters referred to in paragraph 2 are attached as Exhibits l & 2.
4. Persons telephoning the listed number receive a sales presentation soliciting orders for ballpoint pens or key tags. Respondent's sales solicitors advise callers that an order for advertising specialty products must be placed to receive the boat and motor.
5. By means of their certified mailings described in paragraphs 2 and 3 and by means of the telephone solicitations referred to in paragraph 4, Respondents represent, directly or indirectly, in substance and effect, whether by affirmative statements, omissions, or implication, that:
a. Each recipient of Respondents' letter will receive a Clearwater Sports Fishing Boat and Motor free of charge.
b. The only requirement for claiming and receiving the Clearwater Sports Fishing Boat and Motor is placing a telephone call to the number listed within 72 hours of receipt of Respondents' letter."
Subsequent to the execution of the Consent Agreement, members of the public were sent letters on Marketing letterhead informing them that they had been selected to "receive" or to "redeem and receive a new 10 foot ELECTRA SPORT FISHING BOAT AND OUTBOARD MOTOR" (Hubble Decl. attachment; Blair Decl. attachment). The letter specifically states that "there is no purchase necessary to redeem and receive the boat and motor]]]" (Id.). The only requirement to redeem and receive the boat and motor which is set forth in the letter is to telephone Marketing to arrange for shipment (Id.).
Individuals who respond to the Marketing letter are solicited to purchase advertising specialty items such as pens or key tags and are offered a free vacation as an inducement to make such a purchase (Hubble Decl.; Jackson Decl.; Blair Decl.; Gebbia Decl.). Although the callers are generally told the boat and motor are theirs regardless of whether they purchase the pens or key tags, redemption of the boat and motor is directly tied to a shipping charge of $89.00 or more which they learn of either in the telephone call or by means of a subsequently received redemption voucher (Id.). The redemption voucher seeks payment of the fee to Georgio (Hubble Decl. attachment; Jackson Decl. attachment; Shell Decl. attachment; Gebbia Decl. attachment; Ex. 4, p. 5).
JJMJJ does business as Marketing (Ex. 9, p. 1; Ex. 11, p. 1). Remittance checks from customers made payable to Marketing have been deposited in an account of JJMJJ (d/b/a Marketing) (Cross Aff. 18; Ex. 5, p. 2). One bank account to which a deposit was made by JJMJJ d/b/a Marketing was account number 00l-788-9 at the National Bank of Fort Sam Houston (Ex. 5, p. 2). The account holder for account number 00l-788-9 is JJJJM*/ Investment, Inc. d/b/a Marketing and one of the authorized signatures on the account is J. W. Arthur, President (Cross Aff. 20; Ex. 12). The business address listed for JJJJM Investment, Inc. is 2615 Broadway, San Antonio, Texas 78215 (Id.). That address is also used by Marketing and Printers (Ex. 3, pp. 6 & 8; Ex. 12, p. 1; Hubble Decl. attachment; Jackson Decl. attachment; Ex. 17, p. 1).
Two employees of Printers, James A. Arthur and Tracie Newhouse, are corporate officers of JJMJJ and authorized to draw on the JJMJJ bank account of the River City Bank in San Antonio, Texas (Cross Aff. 19; Ex. 11). Another employee of Printers, Esther Aldrede, is authorized along with James Arthur to receive mail for Marketing and Georgio at two post office boxes (Cross Aff. 15; Exs. 7 & 8). In addition, in at least one instance, a credit card billing resulting from a Marketing solicitation showed that the money was to be paid to Printer's Clearing House, San Antonio, Texas (Cross Aff. 17; Ex. 15, p. 5).
Respondent contends the Judicial Officer was not authorized to issue the Interim Detention Order and that there is no basis for issuing the requested False Representation Order. Respondent's principal contention is that JJMJJ and Georgio are not parties to the Consent Agreement and therefore not bound by its terms. They also contend that the solicitation letter, as revised, is not misleading.
In its reply, Respondent requested a hearing for the purpose of showing that Printers is not associated with JJMJJ and Georgio and that the activities of JJMJJ and Georgio do not breach the terms of the Consent Agreement. While Respondent has generally denied the allegations of the Petition, it has not denied the underlying facts on which the allegations of the Petition are based. Moreover, Respondent has not supported its denials with affidavits or other documentation which show the existence of a genuine issue of material fact. Under such circumstances Respondent has not established that an evidentiary hearing or oral argument is required. See Mummers and Law Enforcement Academy, P.S. Docket Nos. 22/67 & 22/99 (P.S.D. Aug. 31, 1987); cf. Celotex Corp. v. Catrett, 477 U.S. 317 (1986); Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986).
Respondent argues that an Interim Detention Order in a false representation case can only be issued by a United States District Court under 39 U.S.C. 3007 and that the Judicial Officer had no authority to issue the Order which is presently detaining its mail. This argument is not well taken. While 3007 authorizes the United States District Court to order the temporary detention of mail during the pendency of proceedings under 39 U.S.C. 3005, it does not preclude the issuance of an interim detention order by the Judicial Officer under the terms of a Consent Agreement. The Consent Agreement executed by Respondent, in paragraph 3, clearly and unequivocally authorizes the Judicial Officer to issue an order "to detain mail addressed to the name or names then being employed, pending final resolution of the issue concerning the alleged breach...." Thus, the issuance of the interim order in this case was well within the authority of the Judicial Officer.
Respondent argues that the Consent Agreement does not authorize the issuance of an interim or permanent False Representation Order against Marketing or Georgio, since they are not parties to the Agreement. The uncontested facts establish the interrelationship between the newly formed corporations of JJMJJ and Georgio and the original parties, Printers and J. W. Arthur. This interrelation- ship establishes an identity of interest which constitutes privity between the original Respondents and the two newly formed corpora- tions. Therefore, those corporations are bound by the terms of the Consent Agreement.
Respondent argues that the orders sought in the Petition may not be issued against Georgio and JJMJJ since, as non-parties, they have not been given proper notice of this proceeding. Respondent further contends that without such notice JJMJJ and Georgio have been deprived of their due process rights. No due process violation has occurred. Notice of the Petition was served on all parties against whom orders were requested to be issued. Moreover, while Respondent contends otherwise, as previously concluded, privity exists between the original Respondents and Georgio and JJMJJ. Therefore the latter corporations are bound by the terms of the Consent Agreement.
Respondent further argues that the Interim Detention Order is too broad because it not only covers the distribution of boats and motors, but encompasses advertising specialty products or vacations which are beyond the scope of the terms of the Consent Agreement. This argument has no merit. Paragraph 4 of the Complaint specifically refers to solicitations for orders for ballpoint pens and key tags. These advertising specialty items are thus properly within the scope of the order. The vacations are also properly within its scope since they constitute an inducement to purchase the specialty items and are part of the same overall scheme. Therefore, it was clearly proper to include both the advertising specialty products and vacations within the terms of the Interim Detention Order. In addition, it is also proper to include those items within the terms of the False Representation Order issued with this Decision.
Respondent next contends that the limitation on the inspection of detained mail to the "outside cover" of such mail goes beyond the scope of the Consent Agreement. This argument also is not persuasive. The Consent Agreement provides Respondent an opportunity to "inspect all mail." While the Agreement does not define the term "inspect", a review of the outside cover of all detained mail is a reasonable condition of inspection in the absence of any provision which allows the mail to be opened.
Respondent's final argument is that its current promotional letters are not misleading. Respondent points out that its current promotional materials use the word "redeem" and inform the reader that "this is not a contest, drawing, lottery sweepstakes, prize, or game, and has no involvement with time share." Based on this wording, Respondent argues that the ordinary reader should not expect to receive the boat and motor without charge. Respondent's argument is not persuasive. In determining whether an advertiser has resumed making the representations it agreed to discontinue, the current advertising is to be considered in its totality and the impression it would most probably create in ordinary minds. Donaldson v. Read Magazine, Inc. , 333 U.S. 178 (1948); Vibra-Brush Corp. v. Schaffer , 152 F. Supp. 461 (S.D.N.Y. 1957); Borg-Johnson Electronics, Inc. v. Christenberry , 169 F. Supp. 746 (S.D.N.Y. 1959). The character of a representation is not necessarily altered just because a slight change in language has been made. Hampartzoon Bazarian d/b/a Shamrock Leisure Travels , P.S. Docket No. 20/103 (P.S.D. March 24, 1986); Smith Promotions, et al. , P.S. Docket No. 3/58 (P.S.D. Feb. 17, 1982).
Applying these principles to the current promotional letters attached to the Petition, it is concluded that Respondent has resumed the representations which it agreed to discontinue. The current letters viewed as a whole continue to convey the impression that the boat and motor are free of charge. Since a redemption fee is required to obtain the boat and motor, Respondent continues to make the false representations alleged in the Complaint.
Respondent has breached the terms of the Consent Agreement in the manner alleged in the Petition. Accordingly, as sought in the Petition and authorized in the Consent Agreement a False Representation Order pursuant to 39 U.S.C. 3005, is being issued with this Decision.