In the Matter of the Complaint Against: FINDERHOOD, INC., 8 W. 36th, New York, NY 10018-8083; GEORGE FELDMAN, 11 Old Colony Lane, Great Neck, NY 11023-1623; GEOFFREY FELDMAN, 11 Old Colony Lane, Great Neck, NY 11023-1623; AWARDS DEPOT, 7040 W. Palmetto Park Road, Suite 500, Boca Raton, FL 33433-3461; WAREHOUSE DEPOT, 527 Third Avenue, Suite 100, New York, NY 10016-4168, Attn: Shipping Dept. P.S. Docket No. 34/102 01/12/90 Mason, Randolph D., Administrative Law Judge APPEARANCES FOR COMPLAINANT: Jennifer Yopes Angelo, Esq., Peter J. Wheeler, Esq., Consumer Protection Division, Law Department, United States Postal Service, Washington, DC 20260-1144 APPEARANCE FOR RESPONDENTS: Herbert Monte Levy, Esq., 60 East 42nd St, Suite 4210, New York, New York 10165-0007
This proceeding was initiated on May 25, 1989, when the Postal Service filed a Complaint alleging that Respondents Finderhood, Inc., George Feldman, Geoffrey Feldman, and Awards Depot, are engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations in violation of 39 U.S.C. § 3005. On August 22, 1989, Complainant filed an Amended Complaint adding Respondent Warehouse Depot. The Motion to Amend was granted at the hearing (Tr. 4). Specifically, the Amended Complaint alleges in paragraph 7 that Respondents falsely represent, directly or indirectly, in substance and effect, whether by affirmative statement, implication or omission, that:
(a) The recipient of the postcard ("recipient") has won the product described on the postcard ("product");
(b) The recipient has ordered or authorized the shipment of the product;
(c) The product has been set aside specifically for the recipient;
(d) The postcard is something other than an offer to sell the food processor for the amount requested;
(e) The product is a "food processor" as that term commonly is understood to mean, i.e., an electric appliance;
(f) The product is substantially more valuable than the $14.77 required to receive it;
(g) The product is valuable enough to warrant the purchase of insurance to cover its loss or damage in shipping; and,
(h) The shipper of the product has purchased insurance to cover its loss or damage in shipping.
The Amended Complaint also alleges that Respondents' mailings are solicitations that are in the form of, and reasonably could be interpreted or construed as bills, invoices or statements of account due; that they are nonmailable under 39 U.S.C. § 3001(d); and as such are prima facie evidence that Respondents are engaged in conducting a scheme for obtaining money through the mail by false representations under 39 U.S.C. § 3005. In their Answer to the Amended Complaint, filed at the hearing (Tr. 6), Respondents deny that they make the above false representations or that they have otherwise violated the statute.
A hearing was held by the undersigned Administrative Law Judge on September 6, 1989, in New York, NY. All parties were represented by counsel and afforded full opportunity to be heard, adduce relevant evidence, and examine and cross-examine witnesses. Complainant presented the testimony of Postal Inspector John Marsh; Respondents presented the testimony of Geoffrey Feldman and George Feldman. Both parties presented documentary evidence and a joint Stipulation of the Parties.
On November 17, 1989, the parties filed proposed findings of fact and conclusions of law which have been duly considered. To the extent indicated below, proposed findings and conclusions have been adopted; otherwise, they have been rejected as irrelevant or contrary to the evidence. Based on the entire record herein, including my observation of the witnesses and their demeanor, the exhibits, stipulations, and other relevant evidence adduced at the hearing, I make the following findings of fact and conclusions of law:
1. Respondent Finderhood, Inc. has its principal place of business at 8 West 36th St., New York, NY 10018-8083 (Complaint P2; Tr. 12). Respondent George Feldman is the chairman and chief executive officer, and receives a salary from the corporation (Id.). He is the father of Respondent Geoffrey Feldman, who is the president. They are the only corporate officers, and both participate in the control and direction of the corporate activities (Tr. 40, 84; Ans. P1; Amnd. Comp. P4 not denied). George is semi-retired, but still counsels Geoffrey and has access to the corporate bank account (Tr. 103, 105). Geoffrey conceived the idea for the promotion in issue here; George was aware of the promotion, but was not directly involved in the advertising, purchase, and sale of the "food processors" (Tr. 47, 86).
2. Awards Depot is a trade name under which Finderhood, Inc. solicited money through the mail to 7040 W. Palmetto Park Rd., Suite 500 or Dept. 500, Boca Raton, FL 33433-3461. Warehouse Depot is a trade name under which Finderhood, Inc. solicited money through the mail to 527 Third Avenue, Suite 100, New York, NY 10016, Attn: Shipping Dept (Amended Ans. PP2-3).
3. Respondents sent postcards to its previous customers designed to elicit the remittance of $14.77 to receive an "AR705 Cuisine Food Processor" (CX-1-3; Tr. 5; Stip. 1). The manufacturer from whom Respondents buy this product (for $2.70 to $4.00 each) refers to it as a "food processor," but the picture in the manufacturer's catalogue clearly shows that it is manually operated by a hand crank (RX-1). Another manufacturer of a similar product refers to it as a "Hand Food Processor," and this is also pictured with a hand crank (RX-3). Still another refers to it as a "Food Processor, Hand Operated" (RX-4). The manufacturer's catalogue goes to retailers, and not to the general public (Tr. 59).
4. Prior to the instant hearing, Virginia Dambach, a resident of St. Petersburgh, FL in her 70's who had previously testified in U.S. District Court in Fort Lauderdale, FL in a § 3007 proceeding involving the same parties, told the Postal Inspector that she preferred not to come to New York to testify because of the long trip and she considered it unnecessary since she had already testified (Tr. 17, 19, 25). The Inspector construed her remarks as a declination -- "she chose not to come" (Tr. 17, 25). Although he subsequently told her that he believed her previous testimony could be used as evidence, and this probably reduced the chances that she would change her mind, it was still clear to him that she would not testify again and he saw no need to attempt to "cajole" her into doing so. Her prior testimony concerned a postcard she received in December of 1988 identical to CX-2 (Tr. 26, 28, 31; CX-4, pp. 30-45).
5. Respondents make Representations (a) through (h) as alleged in Paragraph 7 of the Amended Complaint. The language contained in Respondents' advertisements which makes each representation is set forth below under the quoted representation. All of these representations are materially false.
(a) The recipient of the postcard ("recipient") has won the product described on the postcard ("product");
6. Respondents represent themselves as the "Awards Depot" (CX-1, 2). "Awards" are typically bestowed or conferred upon recipients, and many ordinary readers would get the impression that they had "won" the award (product) described on the postcard. Webster's Ninth New Collegiate Dictionary (1986). On CX-2, the bold type "Congratulations]" also reinforces this impression. See also, CX-4, pp. 35, 40.
7. The fact that the recipient must pay $14.77 before the product will be delivered does not convey to the reader that he is purchasing, rather than winning, the product. As set forth below, the average recipient gets the impression that he had won a valuable food processor worth far more than the amount required, and that the $14.77 is a nominal charge for shipping, handling or other minor expenses. Also, the requirement to respond within 48 hours enhances the representation that a prize is being offered, i.e., that if it is not claimed it will be given to someone else.
8. Representation (a) is false (Stip. 2).
(b) The recipient has ordered or authorized the shipment of the product;
9. Another substantial group of ordinary readers would get this impression from the mailing. CX-1 has the overall appearance of a notice of attempted delivery similar to one that a parcel delivery service would leave on a recipient's front door. It begins:
"WE'RE SORRY . . . Delivery of the following package(s) from Awards Depot requires your authorization. For immediate shipment, follow instructions below."
This gives the impression to many readers that the recipient had previously ordered or authorized the product, and that the company is apologizing for failing to make delivery of the "package(s)" more promptly. Also, CX-1 contains a "Delivery Confirmation Notice," suggesting that the addressee "confirm" a previous order. In addition, a block entitled "Official Use Only" contains a handwritten tracking number with the initials of someone authorizing the shipment (CX-1), and CX-2 contains a shipping number. These items suggest that something was done to precipitate the notice and attempted shipment, and many readers would assume that an order or authorization had been placed.
10. Contrary to Complainant's contention, CX-3 does not make this representation. It is recognized that certain factors, when viewed alone, tend to make Representation (b). First, the recipient is promised a valuable food processor worth far more than the incidental $14.77 he is instructed to pay, and a previous order is a reasonable explanation for this. Second, in addition to the shipping and tracking numbers, the postcard contains the initials of someone "authorizing" the shipment, and handwritten check marks in boxes labeled "acc't", "computer", and "depot." These indicate that care was taken by the Respondents to set aside the product for this particular recipient.
11. However, the following notice at the top of CX-3 militates against the impression that the customer has previously ordered or authorized the product:
ADDRESSEE PLEASE RESPOND
Delivery of the following package(s) from Warehouse Depot requires your purchase. For immediate shipment, follow instructions below.
The notification that "delivery . . . requires your purchase" acts as a satisfactory disclaimer to dispel any impression that the product had been previously ordered or authorized by the recipient. In addition, the shipping instructions on the side state: If we don't hear from you, shipment will not be made and no further solicitation will be attempted. (Emphasis supplied)
Accordingly, Complainant's contention that CX-3 makes Representation (b) is rejected.
12. Representation (b) is false (Stip. 4).
(c) The product has been set aside specifically for the recipient;
13. Each of the postcards states that a package is being held:
"Delivery of the following package(s) from Awards Depot [or Warehouse Depot] requires your authorization [or purchase]. For immediate shipment, follow instructions below." [CX-1-3; bracketed language in CX-3 only]
The block for "Official Use Only" contains the handwritten authorization for the package with a specific area number, tracking number, and, in CX-2-3 a shipping number. CX-2 and CX-3 also contain handwritten check marks in boxes labeled "Acc't", "Computer," and "Vault." All of these factors give the impression that the product has been set aside specifically for the recipient. This representation is false (Stips. 1, 3; Tr. 92).
(d) The postcard is something other than an offer to sell the food processor for the amount requested;
14. As previously stated under Representations (a) and (b), the average recipient of CX-1 and CX-2 receives the impression that he or she has either won the product or that he has already ordered or authorized it. Representation (d) follows from these conclusions.
15. In CX-3 the recipient is told that "delivery . . . requires your purchase", and the postcard is also referred to as a "solicitation." The latter reference would not be noticed by many readers. The question remains whether readers receive the impression that Respondents are offering to sell the food processor for $14.77, or whether the postcard is something other than an offer to sell the product for that amount. As set forth under Representation (e), the average recipient gets the impression that he would be receiving a valuable food processor worth more than the "payment amount" requested, which appears to be a nominal charge for shipping, handling, or other incidental expenses. However, the fact that the product may be worth more than $14.77 does not mean that that amount does not represent the purchase price to the recipient. Many ordinary readers of CX-3 might assume that they were beneficiaries of a promotional campaign. Complainant has failed to prove that readers of CX-3 would think it was anything other than an offer to sell the product for $14.77. It is unlikely that many readers would assume, as contended by Complainant, that someone else in their household had initiated the purchase for a larger price, and that the purchase could be completed by merely paying a balance due of $14.77. Accordingly, CX-3 does not make Representation (d).
16. Representation (d) is false (Stips. 1-4; Tr. 89-93).
(e) The product is a "food processor" as that term commonly is understood to mean, i.e., an electric appliance;
17. CX-1 and CX-2 both describe the product as follows:
"(1) ONE AR705 CUISINE FOOD PROCESSOR with 2 stainless steel blades, easy-lever manual handle operator, deep-storage container, slicing/shredding functions, easy to assemble & clean, lifetime guarantee."
18. The description of the product is the same in CX-3 except that it adds the words "safe, electric-free," after "shredding functions."
19. The common definition of a "food processor" is "an electric kitchen appliance with a set of interchangeable blades revolving inside a container." Webster's Ninth New Collegiate Dictionary (1986). Respondents point to a definition in the American Heritage Dictionary which defines it as an "appliance" which processes food at high speed, with no mention of the word "electric." However, Respondent's contention that the term food processor includes a manually operated machine is rejected in view of the definition in Webster's and the fact that an "appliance" is a "household or office device (as a stove, fan, or refrigerator) operated by gas or electric current." Webster's, supra.
20. The "easy-lever manual handle operator" language would not be noticeable to many readers, and, even if it were read, it does not convey the impression that the product must be manually operated (CX-4, pp. 32, 34-35, 38). The ambiguous "manual handle" appears to refer to "operator," i.e. a person operating the device.
21. In addition, the disclaimer "safe, electric-free" in CX-3 is buried in the middle of the product description and would not be noticed by many ordinary readers. Moreover, "electric-free" is not a commonly used term, and many ordinary readers would only notice the word "electric."
22. Representation (e) is false (CX-7).
(f) The product is substantially more valuable than the $14.77 required to receive it;
23. As indicated above, an ordinary recipient assumes that he or she is receiving an electric food processor. It is undisputed that such items are substantially more valuable than $14.77. The latter cost would be viewed by the recipient as a nominal charge for shipping, handling or other minor expenses (CX-4, pp. 35, 40).
24. This impression is reinforced on CX-2 by the section entitled "Insurance Charges" with handwritten check marks indicating "$0," "None-Prepaid", and "Free Replacement." This gives the impression that the product was valuable enough to warrant the purchase of insurance by Respondents, and that insurance was purchased to cover damage in shipping (CX-4, p. 36). In fact, none was purchased (Stip. P7). Further, the representation that the product was being held in a "vault" in CX-2 also contributes to Representation (f).
25. The actual cost to Respondents for their manually operated product is only $4 (Stip. 6). The retail value of this product is clearly not substantially more than $14.77. Accordingly, Representation (f) is materially false.
(g) The product is valuable enough to warrant the purchase of insurance to cover its loss or damage in shipping.
(h) The shipper of the product has purchased insurance to cover its loss or damage in shipping.
26. As indicated under Representation (f), CX-2 gives the impression by its "Insurance Charges" that the product is valuable enough to warrant the purchase of insurance to cover its loss or damage in shipping, and that Respondents had purchased such insurance (CX-4, p. 36). Further, the ordinary reader would assume that an electric food processor would be valuable enough to be insured.
27. In fact, Respondents do not purchase such insurance since it only pays $4 for the product (Stip. 6, 7). Accordingly, these representations are materially false.
Solicitations in the Guise of Invoices
28. As indicated under Representation (b), Respondents' postcards (CX-1-2) give the impression that the recipient had previously ordered or authorized delivery of the product, and that Respondents have set aside the product for this particular recipient. Under "Action required for Delivery", CX-1 states: "Amount Due $14.77." CX-2 states:
"Send this amount [bold arrow points to] PAYMENT AMOUNT Return this Notice with payment within 48 hours 14.77" [The dollar amount appears in very large bold type].
29. Both CX-2 and CX-3 have an invoice-like tear-off. CX-2 states "payment receipt, keep for your records" showing the $14.77 dollar amount and the shipping number.
30. Although CX-3 contains some of the same characteristics of an invoice, the disclaimer at the top of the postcard that "delivery . . . requires your purchase" acts as a satisfactory disclaimer to dispel this impression.
31. In view of the above, it is concluded that CX-1 and CX-2 are solicitations that are in the form of, and reasonably could be interpreted or construed as bills, invoices or statements of account due.
1. At the hearing, Complainant sought to introduce the sworn testimony of Virginia Dambach (CX-4, pp. 30-44), who had testified for the Postal Service in a previous proceeding under 39 U.S.C. § 3007 in United States District Court. Respondents contend that the testimony does not fall within the hearsay exception in § 804 of the Federal Rules of Evidence (FRE), arguing that Complainant has failed to show that the witness was "unavailable."
2. FRE 804(b)(1) provides, in pertinent part, that when the declarant is unavailable, her former testimony is admissible if the party against whom the testimony is offered had an opportunity to develop the testimony by cross examination. The only issue here is whether Ms. Dambach was unavailable. Under FRE 804(a)(5) a declarant is unavailable where:
(a) . . . the declarant -- . . .(5) is absent from the hearing and the proponent of his statement has been unable to procure his attendance . . . by process or other reasonable means."
3. Due to the lack of subpoena power, a witness cannot be compelled to attend a § 3005 hearing. Under the circumstances, the Judicial Officer has held former testimony inadmissible under FRE § 804 when the proponent failed "to show that it had been unable to procure the voluntary attendance of the witnesses" at the § 3005 hearing. Keystone Industries, P.S. Docket Nos. 17/44-46 (P.S.D. February 29, 1984).
4. In the instant case, Complainant has shown that it was unable to procure Virginia Dambach's voluntary attendance at the hearing. Accordingly, she was "unavailable" within the meaning of FRE § 804(a)(5). As explained in FOF 4, supra, the Postal Inspector attempted to procure her voluntary attendance, but she declined. It is true that the Inspector did not make subsequent efforts to persuade her, and that he even told her, after she declined, that he believed her former testimony could be used at the hearing (Tr. 25). However, he did not try to "cajole" her because he did not think that she was going to change her mind. The proponent of former testimony need only show that he was unable by the use of reasonable means to procure the witness's voluntary attendance at the hearing. Complainant has satisfied that test.
5. Respondents also contend that Dambach was not "unavailable" because Complainant could have gotten other consumer witnesses to testify. Respondents rely upon Carter-Wallace, Inc. v. Otte, 474 F.2d 529 (2d Cir. 1972), cert. denied, 412 U.S. 929 (1973), which held that if one expert witness is unavailable, there is no need to use his previous testimony if other experts can be found to testify. However, the instant case is distinguishable since only Ms. Dambach can testify as to her own unique personal interpretation of the solicitation. Accordingly, although the live testimony would have been preferable, Dambach's former testimony (CX-4) is admissible under FRE § 804(b)(1) and has been considered in the instant proceeding in the analysis of CX-2.
6. It is noted that the regulations provide that the Federal Rules of Evidence may be relaxed to the extent that the Administrative Law Judge deems proper to insure a fair hearing. 39 CFR § 952.18 (a). n1 Assuming arguendo that the Dambach testimony were inadmissible under FRE § 804(b)(1), it is particularly reliable and trustworthy, and should be received as evidence in the instant proceeding. Moreover, other evidence of record fully supports the finding that the representations are made, and Ms. Dambach's testimony merely corroborates that evidence.
n1 Contrary to Respondents' contention, the Administrative Procedure Act (APA) is applicable to proceedings under § 3005. 39 U.S.C. § 3001(f); Atlas Publishing, Inc. v. USPS, No. 82-1904-Civ-SMA (S.D. Fla. 1982), aff'd, No. 83-5627 (11th Cir. 1983); see also, United States Testing Authority, P.S. Docket Nos. 14/77 and 14/114 (P.S.D. on Mot. to Dismiss Pet. for Supp. Orders, March 21, 1984) citing legislative history of the Mail Order Consumer Protection Amendments Act of 1983, P.L. 98-186, 97 Stat. 1315. It is undisputed that the Federal Rules of Evidence need not be strictly applied in hearings under the APA. E.g., Project Prayer, P.S. Docket No. 8/68 (P.S.D. 1981).
7. (a) Each of Respondents' advertisements must 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 statute is intended to protect the gullible, naive, and less critical reader, as well as the more sophisticated, wary reader. Fields v. Hannegan, 162 F.2d 17 (D.C. Cir. 1947), cert. denied, 332 U.S. 773 (1947); M.K.S. Enterprises, Inc. v. United States Postal Service, 459 F. Supp. 1180, 1184 (E.D.N.Y. 1978); Gottlieb v. Schaffer, 141 F. Supp. 7 (S.D.N.Y. 1956); Leo Daboub, P.S. Docket No. 19/185 (P.S.D. July 10, 1986). Express misrepresentations are not required. It is the net impression which the advertisement is likely to make upon individuals 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 false representation statute is applicable. G. J. Howard Co. v. Cassidy, 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).
(b) Where an advertisement is ambiguous or capable of more than one meaning, if one of those meanings is false, the advertisement will be held to be misleading. Rhodes Pharmacal Co. v. F.T.C., 208 F.2d 382, 387 (7th Cir. 1953); Ralph J. Galliano, P.S. Docket No. 19/15 (P.S.D. May 2, 1985 at p. 9). It is not difficult to select words that will not deceive. See, United States v. 95 Barrels of Vinegar, 265 U.S. 438 (1924).
(c) An inconspicuous disclaimer is not sufficient to dispel the effect of false representations. Leo Daboub, supra; Gottlieb v. Schaffer, supra.
(d) The Administrative Law Judge can determine whether the representations are made, their effect on the ordinary mind, and materiality without the assistance of lay or expert testimony. Standard Research Labs, P.S. Docket No. 7/78 (P.S.D. Oct. 27, 1980); The Robertson-Taylor Company, P.S. Docket Nos. 16/98-102, 16/120-121, (P.S.D. March 31, 1986 at page 29); 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). However, the testimony of a consumer as to his personal interpretation of an advertisement may be helpful in making this determination. Such testimony is relevant and admissible. Suarez Corp. v. USPS, No. C87-358A (N.D. Ohio, May 3, 1988); Borg-Johnson Electric v. Christenberry, 169 F. Supp. 746 (S.D.N.Y. 1959). Consumers are qualified to give such testimony. The fact that lay testimonials are not admissible on the question of efficacy under 39 CFR § 952.18(f), an area in which such evidence is frequently unreliable, does not detract from the value of consumer testimony on whether representations are made.
8. Applying the foregoing standards, I find that Respondents' advertisements make the representations alleged in P7(a)-(h) of the Amended Complaint. The language contained in the advertisements, when read in context, which directly or impliedly makes these representations is set forth in the findings of fact.
9. As set forth in the findings of fact, the representations set forth in paragraph 7 of the Amended Complaint are materially false.
10. The representations made by Respondents are material because they have a tendency to persuade readers to order and pay for Respondents' product.
11. Respondents contend that only a small number of customers have complained, and that none complained about the representations in issue herein. However, whether anyone actually complains or has been deceived by Respondents' advertisements is irrelevant on the issue of false representation. Farley v. Heininger, 105 F.2d 79 (D.C. Cir. 1939). It is the likelihood of deception or the advertisement's capacity to deceive which must be judged. Montgomery Ward & Co. v. FTC, 379 F.2d 666 (7th Cir. 1967); Mid-Am Marketing, Inc., P.S. Docket No. 24/12 (P.S.D. on Recon., May 7, 1987).
12. A solicitation is "nonmailable" if it "is in the form of, and reasonably could be interpreted or construed as, a bill, invoice, or statement of account due" unless it contains the disclaimer prescribed by the statute or the Domestic Mail Manual. n2 The determination of mailability is to be based on the totality of the solicitation and the impression created in the minds of those to whom it is directed. Donaldson v. Read Magazine, Inc., 333 U.S. 178 (1948); Borg-Johnson Electronics v. Christenberry, 169 F. Supp. 746 (S.D.N.Y. 1959); Vibra-Brush Corp. v. Schaffer, 152 F. Supp. 461 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2d Cir. 1958). This does not mean that the trier of fact is limited to the interpretation which a majority of recipients would place on a solicitation. Rather, the trusting are to be protected as well as the wary. Donaldson v. Read Magazine, Inc., supra, at 189; Fields v. Hannegan, 162 F.2d 17 (D.C. Cir. 1947), cert. denied, 332 U.S. 773 (1947); M.K.S. Enterprises, Inc. v. United States Postal Service, 459 F. Supp. 1180, 1184 (E.D.N.Y. 1978); IHS Department of Unclaimed Funds and Benefits, P.S. Docket No. 22/155 (P.S.D. Sept. 22, 1986); Leo Daboub, P.S. Docket No. 19/185 (P.S.D. July 10, 1986).
n2 The statute requires the following prominent and conspicuous notice: "This is a solicitation for the order of goods or services, or both, and not a bill, invoice, or statement of account due. You are under no obligation to make any payments on account of this offer unless you accept this offer." 39 U.S.C. § 3001(d)(2)(A). The regulations provide the following alternative: "THIS IS NOT A BILL. THIS IS A SOLICITATION, YOU ARE UNDER NO OBLIGATION TO PAY UNLESS YOU ACCEPT THIS OFFER." DMM § 123.41(a). Respondents' mailings do not contain either notice.
13. The best evidence that a mailing appears to be an invoice is the mailing itself. Telex & twx Directory, P.S. Docket No. 13/6 (P.S.D. April 1, 1983). As set forth in the findings of fact under Representation (b), Respondents' postcards (CX-1 and CX-2) would appear to many ordinary readers to represent that the recipient has ordered or authorized the shipment of the product. When this representation is considered with the postcard's emphasis on the amount due or to be paid, and the tear-off portion (CX-2), it is concluded that each postcard is a solicitation in the form of, and reasonably could be interpreted or construed as, a bill, invoice or statement of account due. Accordingly, since CX-1 and CX-2 fail to contain the disclaimer required by either the statute or regulations, they are nonmailable and constitute prima facie evidence that Respondents are engaged in a scheme or device to obtain money through the mail by means of false representations. 39 U.S.C. § 3001(d) and 3005(a).
14. (a) Respondents argue that the allegations are moot because they discontinued sending CX-1 and CX-2 on June 20, 1989, after the Complaint was filed, and stopped mailing CX-3 the day before the hearing (Tr. 62). However, voluntary cessation of a scheme does not deprive the Administrative Law Judge of power to hear and determine the case, i.e., does not make the case moot. Such a result would leave the Respondent "free to return to his old ways." United States v. W. T. Grant, Co., 345 U.S. 629, 632 (1953).
(b) Respondents also contend that they relied upon the Initial Decision in Card Redemption Center, P.S. Docket No. 30/35 (I.D. September 13, 1988) as a guide in drafting CX-1 and CX-2. Although the solicitations there are vaguely similar to the postcards in issue, they are clearly distinguishable. Each case must be judged on its own facts. Moreover, the Judicial Officer reversed the above decision with respect to all but one of the pertinent allegations. Card Redemption Center, P.S. Docket No. 30/35 (P.S.D. June 30, 1989).
(c) Respondents also introduced RX-6 and RX-7 as advertisements that will be sent out in the future. However, the Administrative Law Judge does not issue advisory opinions or give approval to proposed ads. See, George M. Ernst, Jr., P.S. Docket No. 13/88 (P.S.D. May 1, 1984), affd Many Interested Savers, Inc. v. United States Postal Service, Civil Action No. 84-304 (E.D. KY February 20, 1986); Paul Harvey, P.S. Docket No. 8/10 (P.S.D. Aug. 29, 1980).
(d) Complainant has established its case by a preponderance of the reliable and probative evidence of record. S.E.C. v. Savoy Industries, Inc., 587 F.2d 1149, 1168 (D.C. Cir. 1978).
15. Respondents are engaged in the conduct of a scheme to obtain remittances through the mail by means of materially false representations in violation of 39 U.S.C. § 3005.
16. Respondents argue that any Cease and Desist Order issued in this case should not include George Feldman. Complainant argues that George should be subjected to the Cease and Desist Order because he is the chief executive officer and the father of Geoffrey Feldman, who admittedly designed the scheme. For the reasons set forth below, the Cease and Desist Order should be issued against George Feldman.
17. Congress amended 39 U.S.C. § 3005 in 1983 to provide in subsection (a)(3) that the Postal Service may order a "person" who is engaged in a scheme to obtain money through the mails through false representations to "cease and desist" from such conduct. Congress's purpose in granting the Postal Service this power over individuals was to strengthen the deterrent effect of the statute and reduce the possibility of evasion of Postal Service orders. W. G. Charles Company, P.S. Docket Nos. 19/103-105, 161-62, 179, 182-84; 20/16, 20/32 (Decision on Motion to Dismiss, January 28, 1985 at p. 10).
18. A cease and desist order will be issued against individuals who are responsible for the conduct of a business. Federal Trade Commission v. Standard Education Society, 302 U.S. 112 (1937). The individuals need not have been responsible for the false advertising itself; it is sufficient if they played some other significant role in the scheme, such as receiving the money from customers. W. G. Charles Company, P.S. Docket Nos. 19/104, 19/162 (P.S.D. Sep. 10, 1985) and W. G. Charles Company, P.S. Docket Nos. 19/105, 19/161, 20/32 (P.S.D. Sept. 30, 1985, at pp. 10-13) (affirming W. G. Charles Company, Docket Nos. 19/103-105, 161-162, 179, 182-84; 20/16, 20/32, Decision & Order on Motion to Dismiss, January 28, 1985, at page 10); Barrett Carpet Mills, Inc. v. Consumer Product Safety Comm., 635 F.2d 299 (4th Cir. 1980).
19. George Feldman has played an integral and important part in the scheme. He is a trusted associate of his son, which is evidenced by the fact that he is responsible for cash received by the business and has access to the bank account. He represents himself as a responsible agent or officer. Accordingly, George is a major participant in the scheme and should be subject to the cease and desist order. If he were not, Geoffrey Feldman could attempt to use him to circumvent the order. Cotherman v. Federal Trade Com., supra at 594-95; W. G. Charles Company, supra.
20. (a) Finally, the Cease and Desist Order should prevent Respondents from making the same representations irrespective of the product which it is selling. Respondents' contention that the Order should be limited to the advertisements in issue relating to the sale of the food processor is rejected. Many of the false representations herein could easily be employed in future advertisements of different products, and the nature of the product may not even be relevant to a determination of whether those false representations are made. Such representations constitute deceptive sales tactics by means of which any product may be sold. They constitute a scheme under § 3005 which will be prevented by means of the attached Cease and Desist Order.
(b) Moreover, even if the Cease and Desist Order herein were considered to be broad in view of its applicability to the sale of any product, such orders have been consistently upheld by the courts. See, e.g., American Genealogies, Inc. v. United States Postal Service, 717 F. Supp. 895 (D.D.C. 1989); Federal Trade Commission v. Mandel Brothers, Inc., 359 U.S. 385, 392-93 (1959); Federal Trade Commission v. Rubberoid Co., 343 U.S. 470, 473 (1952); Federal Trade Commission v. Nat'l Lead Co., 352 U.S. 4l9, 43l (1957); see also National Labor Relations Board v. Express Publishing Company, 312 U.S. 426, 435-37 (1941). Provisions in cease and desist orders which are not limited to the precise violation committed and which cover future violations of a related nature are called "fencing-in" provisions. Orders containing such provisions may be issued (1) when they are reasonably related to the unlawful act found to exist, Jacob Siegel Co. v. F.T.C., 327 U.S. 608, 611-14 (1945) and (2) where there is a likelihood, based on the violator's past conduct, that he will perpetrate additional violations, American Home Products Corp. v. F.T.C., 695 F.2d 681, 705-09 (3d Cir. 1982). Both criteria are satisfied here.
(c) Here the Order, as modified herein, prevents false representations that are not only reasonably related to, but almost identical to, the unlawful act found to exist. In view of Respondents' repeated violations, some of which were after the Complaint was filed, it appears likely that additional violations would occur absent the attached Cease and Desist Order.
21. Respondents' contention that the Cease and Desist Order herein is unconstitutional is also rejected. It is established that false commercial advertising, such as employed by Respondents, has no constitutional protection. Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, Inc., 425 U.S. 748, 771-72 (1976); Konigsberg v. State Bar, 366 U.S. 36, 49 (1961); United States Postal Service v. Athena Products, Ltd., 654 F.2d 362 (5th Cir. 1981) cert. denied, 456 U.S. 915 (1982). Accordingly, the attached Cease and Desist Order does not violate Respondents' Due Process or First Amendment rights.
22. The attached False Representation Order and Cease and Desist Order should be issued.