In the Matter of the Complaint Against ) July 18, 1994 ) CHARLES SMITH, et al. ) 10478 NW 31st Terrace ) ) at ) ) P.S. Docket Nos. 36/129 Miami, FL 33172-1216, etc. ) and 37/180 APPEARANCE FOR COMPLAINANT: Daniel S. Bryant, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-1147 APPEARANCE FOR RESPONDENT: Lawrence H. Schwartz, Esq. William C. Nicholson, Esq. Bayh, Connaughton, Fensterheim & Malone 1350 Eye Street, NW, Suite 200 Washington, DC 20005-3305
The General Counsel of the United States Postal Service (Complainant) has filed a Petition for Supplemental Orders which as amended (Petition) alleges that Charles Smith and Amcan Enterprises, Inc. (Respondents) are evading or attempting to evade the provisions of False Representation Order Nos. 93-62 and 94-2 and Cease and Desist Order Nos. CD-3712 and CD-3722 by seeking remittances through the mail for business listings in yellow page telephone directories using solicitations similar to those previously found to violate 39 U.S.C. §3005. In accordance with 39 C.F.R. §952.30, Complainant requests that supplemental false representation orders be issued against the names and addresses used by Respondents. Respondents have filed an Answer in which they deny the allegations of the Petition and request an evidentiary hearing.
Complainant initiated two proceedings against Respondents, P.S. Docket No. 36/129 (Smith I) and P.S. Docket No. 37/180 (Smith II) alleging that Respondents were engaged in a scheme or device for obtaining money or property though the mail by means of materially false representations in violation of 39 U.S.C. §3005. After full evidentiary hearings in both proceedings, Initial Decisions were issued which were subsequently appealed to the Judicial Officer. On December 9, 1993, and January 31, 1994, the Judicial Officer issued Postal Service Decisions affirming the conclusion of both Initial Decisions that Respondents were making false representations in solicitations for telephone yellow page listings and therefore were seeking remittances through the mail in violation of 39 U.S.C. §3005. False Representation Order No. 93-62 and Cease and Desist Order No. CD-3712 were issued with the December 9, 1993, Postal Service Decision in Smith I, and on January 31, 1994, False Representation Order No. 94-2 and Cease and Desist Order No. CD-3722 were issued with the Postal Service Decision in Smith II. Thereafter, Complainant filed this Petition for Supplemental Orders.
1. The December 1993 Cease and Desist Order issued in Smith I directed Respondents to cease and desist from falsely representing that:
"(a) the addressee has previously authorized a business listing in Respondents' telephone directory;
(b) Respondents are the publishers of the phone directory or 'yellow pages' customarily supplied to business telephone subscribers in the recipient's area;
(c) the area of distribution of Respondents' directory will encompass all telephone subscribers in the region."
2. The January 1994 Cease and Desist Order issued in Smith II also directed Respondents to cease and desist from making the above three false representations and the following four additional representations:
"(d) a directory has thousands of headings of products and services;
(e) the cost of a listing in Respondents' directory is economical and significantly less than other directories;
(f) that Respondents' directory has a wide distribution that reaches the general public;
(g) Respondents' directory is distributed to government agencies, chambers of commerce, hotels, schools, and libraries."
3. In late December 1993 and early January 1994, Respondents mailed two to four million solicitations seeking remittances for listings in their yellow page directories (March Tr. at 9-10;(1) May Tr. at 73-74(2)). These solicitations were "fairly identical" to the solicitations considered in Smith II (March Tr. at 10; May Tr. at 31, 79-81; Answer ¶ 18).
4. In the Smith II Postal Service Decision, the Judicial Officer found that the solicitations considered in that proceeding made the same false representations which the December 9, 1993 Cease and Desist Order issued in Smith I directed Respondents to discontinue. Since the solicitations distributed by Respondents in late December 1993 and early January 1994, are "fairly identical" to the solicitations considered in Smith II, they also make the false representations prohibited by the December 1993 Cease and Desist Order.
5. Sometime in March of 1994, Respondents redesigned their solicitations and again distributed them through the mail seeking remittances for listings in their yellow page directories (May Tr. at 76-84; Petition Attach. No. 4).
6. The March solicitations and the solicitations considered in Smith II contain the term Yellow Pages; use the walking fingers logo; are printed on yellow (or yellow and white) 8 1/2 X 11 inch paper; contain a portion that the customer can tear off and return to North American Directories; contain a printing deadline return date; contain the name of a directory representative; fail to list North American Directories corporate address except on the back; contain the terms on the back; contain any customer refund information on the back; contain the business name, classification, and telephone number of the recipient; refer to a reference or account number; ask the recipient to check a box indicating whether changes are necessary; say that this is not a bill; and refer to a white page listing (May Tr. at 85-87; Petition Attach. Nos. 3 & 4).
7. While there are minor changes in language, color and placement of items on the page, the overall impression created by the March solicitations and the solicitations considered in Smith II is the same (Petition Attach. Nos. 3 & 4).
8. Respondents use seventy addresses(3) not covered by the previously issued false representation orders to receive responses from their solicitation packages (Answer 14; May Tr. 52-54; Notice of Additional Addresses filed in Smith v. Runyon, CA No. 94-0027 on May 6, 1994).
The issue raised by a petition for supplemental order is whether a person is evading or attempting to evade the provisions of a false representation order or cease and desist order by conducting the same or a similar enterprise under a different name or at a different address.(4) Respondents do not deny that they are subject to the false representation and cease and desist orders previously issued. Respondents have admitted that the solicitations mailed in late December 1993 and early January 1994, were fairly identical to those on which the false representation and cease and desist orders of January 31, 1994, were based. Respondents have also admitted that they mailed additional solicitation packages in March of 1994. However, Respondents contend that they made significant changes in the March 1994 solicitations and that those solicitations do not violate 39 U.S.C. §3005.
The solicitations themselves are the best evidence of their contents. Neither lay nor expert testimony is necessary to establish whether the solicitations make the representations alleged in the Petition or the effect of those representations on the ordinary reader.(5) Therefore, because the solicitations themselves are before the Judicial Officer and full evidentiary hearings have already been held, no further evidentiary hearings are necessary to decide the issues raised by the Petition for Supplemental Orders.
Since Respondents admit their December 1993 and January 1994 solicitations are "fairly identical" to the Smith II solicitations which have been found to make the materially false representations prohibited by the December 1993 Cease and Desist Order, the December 1993 and January 1994 solicitations also violate that order. A comparison of Respondents' March 1994 redesigned solicitations with the solicitations which supported the issuance of the orders in Smith I & II, establishes that the March 1994 solicitations continue to make the representations previously found to be false. Despite the minor changes in the March solicitations, the overall impression conveyed to the ordinary reader(6) is the same as the impression conveyed by the solicitations which were the basis for the previous orders. Thus, these solicitations violate the terms of both cease and desist orders.(7)
In addition to their contention that they significantly changed their solicitations, Respondents contend that the Postal Service Rules of Practice deny them due process because they do not provide for a full adversarial hearing in a supplemental order proceeding(8) and do not allow for the issuance of subpoenas. As a result, Respondents contend Complainant should be barred from pursuing its Petition.
Respondents have not shown that there are genuine issues of material fact which justify a hearing in connection with the Petition for Supplemental Orders. Respondents were given full adversarial hearings in connection with their two prior solicitations. Respondents have admitted that the late December 1993 and early January 1994 solicitations were "fairly identical" to the prior solicitations which were previously found to contain materially false representations. Thus, there is no genuine issue of material fact which would constitute good cause for a hearing to be held with respect to the December 1993 and January 1994 solicitation package. There is also no genuine issue of material fact regarding the March 1994 solicitations and thus, no need for an additional hearing with respect to those solicitations. Although Respondents contend their March 1994 solicitations are significantly and substantially different from the previous solicitations, a comparison of Respondents' March 1994 solicitations with the prior solicitations clearly establishes that Respondents are continuing to make the representations they were directed to discontinue. As due process does not require a hearing when there are no genuine issues of material fact,(9) Respondents' rights have not been infringed by the failure to hold a hearing on the issues raised by the Petition.
Respondents, in addition, have not shown that the lack of subpoena power prejudiced them either in this proceeding or in the two prior proceedings since they have not shown that they were unable to voluntarily secure testimony they needed to defend against the allegations of either of the Complaints or the Petition. Absent such a showing, Respondents were not denied due process since the lack of subpoena power is not a per se violation of due process.(10)
Accordingly, there is no merit to Respondents' contention that they were denied their constitutional rights in this proceeding.
Respondents are evading or attempting to evade the provisions of False Representation Order Nos. 93-62 and 94-2, and Cease and Desist Order Nos. CD-3712 and CD-3722 by conducting the same or a similar enterprise using different names and addresses. Accordingly, the Petition for Supplemental Orders is granted and the Order requested in the Petition is issued with this Decision.
James A. Cohen Judicial Officer
2. Respondent Smith's testimony, Smith v. Runyon, CA No. 94-27 (D.D.C. May 17, 1994)(hereinafter referred to as May Transcript).
3. The addresses are listed in Appendix B to the Petition and in Complainant's Motion to Amend Petition, Attachment A-2.
4. See 39 C.F.R. §952.30.
5. See Peak Laboratories, Inc. v. USPS, 556 F.2d 1387, 1389 (5th Cir. 1977); Charles Smith, P.S. Docket No. 37/180 at 17 (P.S.D. Jan. 31, 1994); Scott David Wilcox, P.S. Docket No. 18/147 at 6-7 (P.S.D. April 20, 1988); United States Testing Authority, P.S. Docket Nos. 14/77 & 14/114 at 15-16 (P.S.D. Oct. 2, 1985).
6. It is the overall impression created in the mind of the ordinary reader that determines whether the representations are made in the solicitations. See 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 (2nd Cir. 1958); Charles Smith, P.S. Docket No. 36/129 at 10 (P.S.D. Dec. 9, 1993); Mid-American Marketing, Inc., P.S. Docket No. 24/12 at 7 (P.S.D. Jan. 5, 1987), aff'd, (May 7, 1987).
7. Respondents have not raised the issue of the falsity of the representations. However, if they had, the falsity of representations (b), (c) & (f) is established by the testimony of Respondent Smith (March Tr. at 8-9; May Tr. at 88-90) and the language contained on the solicitations themselves (See Exhs. 7f, 8e, 9d, 10b, 10d, 12c, 14c, 15c, 16d, 18a, 20a, 22b, 26c, 37a, 39b, 40, 42b, 48a, 51a, 55a, 65a, 68, 70a, 74a, 76a, 79c, 80a, 84a, 85a, 86a, 89a, 90a, 91a, 92a, 97a, 98, Attach. Nos. 3 & 4). Although the falsity of representations (a), (d), (e) & (g) is not clearly shown by the record, a finding that Respondents make any of the prohibited false representations is sufficient for the issuance of a supplemental order.
8. The Postal Service Rules of Practice, 39 C.F.R. §952.30, provide for a hearing on the issues upon a showing of good cause which has been consistently interpreted as the existence of a genuine issue of material fact. See Scott David Wilcox, P.S. Docket No. 18/147 at 5 (P.S.D. April 20, 1988); Sammy Y. Ip, P.S. Docket No. 20/65 at 4 (P.S.D. Sept. 30, 1987); United States Testing Authority, P.S. Docket Nos. 14/77 & 14/114 at 8 (P.S.D. Oct. 2, 1985). A showing of good cause is required because the parties were previously afforded a full opportunity to present evidence in support of their claims or defenses at a hearing held by an Administrative Law Judge prior to the issuance of the false representation and cease and desist orders. See 39 C.F.R. §952.7(a).
9. See Railway Express Agency, Inc. v. Civil Aeronautics Board, 345 F.2d 445, 450 (D.C. Cir.), cert. denied, 383 U.S. 879 (1965); NLRB v. Simplot, 322 F.2d 170, 172 (9th Cir. 1963).
10. See DeLong v. Hampton, 422 F.2d 21, 24-25 (3rd Cir. 1970); Rubio v. Hampton, 384 F. Supp. 218, 222 (C.D. Ca. 1974); Henley v. United States, 379 F. Supp. 1044, 1048 (M.D. Pa. 1974); Robertson-Taylor Co., P.S. Docket Nos. 16/98-102 & 16/120-121 at 36-37 (P.S.D. March 31, 1986); Conan Research, P.S. Docket No. 12/7 at 40 (I.D. Jan. 28, 1982). See also Johnson v. United States, 628 F.2d 187, 194 (D.C. Cir. 1980); Cohen v. Ryder, 258 F. Supp. 693, 695 (E.D. Pa. 1966), aff'd, 373 F.2d 530 (1967); Lydia Feldman, P.S. Docket No. 1/202 at 23-24 (I.D. July 27, 1973).