In the Matter of the Complaint Against ) July 11, 1997
)
COM-TEL DIRECTORIES, INC. )
formerly known as )
AMERITEL DIRECTORIES, INC. )
2727 Broadway Street )
Buffalo, NY 14227-1004 )
)
TEL-ADV, INC. )
2727 Broadway Street )
Buffalo, NY 14227-1004 )
)
YELLOW PAGES )
2727 Broadway Street )
Buffalo, NY 14227-1004 )
)
NEAL DELEO )
37 Fruehauf Avenue )
Snyder, NY 14226-3805 ) P.S. Docket No. FR 95-276
APPEARANCE FOR COMPLAINANT: Peter J. Wheeler, Esq.
Inspector/Attorney
Operations Support Group
United States Postal Service
Gateway II, 9th Floor
Newark, NJ 07175-0002
Jennifer Y. Angelo, Esq.
Civil Practice Section
United States Postal Service
475 L'Enfant Plaza, SW
Washington, DC 20260-1147
APPEARANCE FOR RESPONDENTS: Frank J. Shannon, III
127 Peachtree Street, N.E.
920 Candler Building
Atlanta, GA 30303-1827
This is a False Representation case brought against Respondents by the United States Postal Service under 39 U.S.C. §3005. An Initial Decision in the case was issued on June 12, 1996. Respondents' appeal, and Complainant's response, were filed in July 1996. On January 7, 1997, Complainant moved to add to the administrative record then before the Judicial Officer on appeal, the current solicitations being used by Respondents. Respondents opposed this motion, and moved for an evidentiary hearing. On February 20, 1997, the Judicial Officer granted Complainant's motion to add the new solicitations to the record, granted Respondent's motion for an evidentiary hearing, and remanded the case to the undersigned for the purpose of conducting the hearing and issuing an Initial Decision.
The Complaint alleged that Respondents violated 39 U.S.C. §3005 by engaging in a scheme or device for obtaining money or property through the mail by means of false representations.(1) Specifically, paragraph 7 of the Amended Complaint alleged that Respondents, through solicitations mailed to prospective customers, make the following representations, and that these representations are false:
a. Respondents are affiliated with the addressee's local telephone company; b. Respondents are affiliated with a yellow pages directory customarily distributed to all telephone subscribers in the addressee's business area; c. Respondents' notice is to renew or confirm the addressee's existing listing in a yellow pages directory customarily distributed to telephone subscribers in the addressee's business area; d. Failure to respond to the notice will cause the addressee's business telephone listing to be omitted from a yellow pages directory customarily distributed to the telephone subscribers in the addressee's business area; e. The addressee has a previous business relationship with the Respondents; f. The amount set forth on the face of the notice is due and owing to Respondents from the addressee.The June 12, 1996 Initial Decision found that Respondent's earlier solicitations made the representations listed in a-e, above, and that those representations were materially false. The issue on remand is whether Respondents' new solicitations make those same representations and, if so, whether those representations are materially false.
A hearing was held on April 1, 1997 in Washington, D.C. Both parties were represented by counsel. The Postal Service called the postal inspector who investigated the case, and two consumer witnesses - Ms. Bolinger, who runs an art gallery in Buffalo, Wyoming, and Ms. Peterson, who runs a beauty salon in Portland, Oregon. Respondent Neal DeLeo testified on behalf of Respondents. Both parties filed post-hearing briefs, in the form of proposed findings of fact and conclusions of law. To the extent indicated below, proposed findings and conclusions have been adopted; otherwise, they have been rejected as irrelevant or contrary to the evidence. The following findings of fact and conclusions of law are based on the entire record, including all testimony and documentary evidence introduced at the
hearing, and observation of the witnesses and their demeanor.
1. Respondents currently operate under the name, Tel-Adv, Inc. Respondent Neal DeLeo is the sole owner and shareholder of Tel-Adv, Inc. (Tr. 83-84).(2)
2. Respondents' business is printing and selling a "Nationwide Yellow Pages Directory." They solicit business by mailing solicitations to businesses around the country. If a signed form is returned, Respondents send an invoice for payment, to be mailed to 2727 Broadway Street, Buffalo, NY 14227. (Cx-1 through Cx-3).(3)
3. The front page of Respondents' solicitation contains two boxes at the top, under the heading, TEL ADV YELLOW PAGES ACCEPTANCE FORM. The first is titled, "CLASSIFICATION/HEADING," and the second is titled, "BUSINESS LISTING." The first box contains the addressee's telephone number and type of business, along with two other long numbers. Mr. DeLeo believes one of these is a customer identification number, but is uncertain what the other represents. (Tr. 96-98). The box also states "$187 Annual." The second box contains the recipient's full business address, with a bar code. This top portion of the solicitation is to be detached, signed and returned if the recipient wishes to order the directory. In the center of the form, in large type created by a light red outline, are the words, "THIS IS NOT A BILL," and "THIS IS NOT A CONFIRMATION." Below this is the bright yellow "walking fingers" logo, followed by dark grey printing, "YELLOW PAGES ADVERTISING," and in slightly smaller black type, "A NATIONWIDE YELLOW PAGE DIRECTORY PUBLICATION." The potential customer is directed to return the upper portion by a specified date. At the left of the "walking fingers" logo is a box headed, "Questions?," directing recipients to "customer service" telephone and fax numbers. At the bottom of the form in small, but relatively bold type is a statement that Tel Adv is an independent publication, not affiliated with AT&T or any local telephone company. A return envelope addressed to Tel Adv Yellow Pages, 2727 Broadway Street, Buffalo, NY is included with the solicitation.
4. This current version of the solicitation reflects some changes that were made after the first Initial Decision in this case was issued on June 12, 1996. The phrase, "This is not a confirmation," was added; the identification of Tel-Adv as an independent publisher, not affiliated with any telephone company, was moved from the reverse side of the form to the front, and is printed in slightly larger, and bolder, type; the address on the return envelopes, and the heading on the invoice, was changed from "The Yellow Pages," to "Tel-Adv Yellow Pages," and customers are directed to make their check payable to "Tel-Adv Yellow Pages," rather than simply, "The Yellow Pages." (Tr. 86-87, 99-100; Cx. 1-3).
The issue presented is the same as in the original case, i.e., does the solicitation make the alleged representations. Respondents make no claim that the alleged representations are true.(4) Respondents argue, as they did earlier, that their solicitations do not make the alleged representations. If the changes discussed above are sufficient to "cure" the misleading nature of the solicitation, Respondents are correct as to the new solicitation. If not, Respondents should be barred from using either version of the solicitation.
Two excerpts from the first Initial Decision are useful in focusing the issue here:
Respondents argue that Complainant places too much emphasis on use of the "walking fingers" logo and the term "yellow pages." They argue that, if Complainant's position is accepted, the Postal Service could sustain any complaint merely by showing that a publisher used those generic symbols. That is not so. Respondents could easily distinguish themselves from local telephone company directories, and still lawfully use the symbols. Respondents' failing is that they use those familiar symbols, but only inconspicuously identify themselves, thereby misleading potential customers. (I.D. at 7-8). "The issue in a 39 U.S.C. §3005 proceeding is not whether Respondents have the right to use any particular words or logo, but whether materially false representations are being made. Although the walking fingers logo is a generic symbol and words 'yellow pages' a generic term commonly used by many telephone directory publishers, they may nevertheless contribute to the overall impression created by a solicitation, and thus, mislead consumers as to the telephone directory listing being solicited." Directory Publishing Services, P.S. Docket No. 38/122 at 8-9 (P.S.D. February 28, 1994). "[I]t is the obligation of plaintiffs in the instant case to distinguish its product from those commonly associated with the 'Yellow Pages' term and walking fingers logo by the advertisement's recipient." Directory Publishing Services, Inc. v. Runyon, 851 F. upp. 484, 489 (D.D.C. 1994). (I.D. at 16).
The precise question presented on this remand is whether Respondents have met this "obligation," through the changes they made to the solicitation. The changes make the new solicitation somewhat less deceptive than was the original, but the overall impression created is not significantly different. Just as in the original hearing, the consumer witnesses testified that they first believed the solicitation was from their local telephone company, in whose yellow pages they do advertise. (Tr. 53, 67). On closer examination, both realized this solicitation was not from their local company, but they filed complaints because they believed the solicitation was intentionally deceptive. Ms. Bollinger stated, "I could easily have paid this by mistake . . .." (Tr. 61). As in the original case, the testimony of the witnesses as to the deceptive nature of the solicitation is supported by the fact that several other people also filed complaints. (Tr. 15-42; Cx-4 through Cx-15). As in the original case, despite their hearsay nature, these documents were admitted because they were received through normal channels by the postal inspectors and I find them to be reliable support for the witnesses' testimony. On many of these (see Cx-5, Cx-11, Cx-12, and Cx-14), it is clear that the recipient found the solicitation to be deceptive. The fact that some people simply mailed, or delivered, a copy of the solicitation to the Postal Service without any comment makes the nature of their "complaint" somewhat speculative (Cx-8 through Cx-10), but even these are of some corroborative value, as there would seem to be no other reason for the recipient of such a solicitation to turn it over to the Postal Service.
It is also important to note that the number of complaints, in this case an apparently very small number, is not the determinative factor. "That some of the subjects of a misleading representation evade the harm produced by the deception is no excuse. 'The decisive factor . . . is not whether any one complains of fraud, or was in fact defrauded, but whether the mails are being used to project a [fraudulent] scheme.'" Dynaquest Corp. v. U. S. Postal Service, 12 F.3d 1144, 1147 ((D.C. Cir. 1994, quoting from Farley v. Heininger, 105 F.2d 79, 84 (D.C. Cir. 1939)).
Let us examine the specific changes made to the solicitation since this case was first considered. First, the phrase, "This is not a confirmation," was added. Surely, this is better than the original, which had "Confirmation" printed on it, and better than the next version, which merely deleted that word. This new phrase, however, is in the form of type created by a light red outline. Although Mr. DeLeo testified that this was done "to make it stand out," (Tr. 99), I find this somewhat disingenuous because the red type is far less noticeable than the black type on the rest of the page, and likely was intended to be so. Therefore, while the added words take a step toward informing the recipient that the solicitation is not related to an advertisement previously run in a local telephone directory, several things remain which do create that impression. As stated in the first Initial Decision, these are the recipient's full business name, address and telephone number; a short categorization of the nature of the business, under the heading "Classification," and various unidentified numbers, which might well be assumed to be account numbers.
Second, the identification of Tel-Adv as an independent publisher, not affiliated with any telephone company, was moved to the front of the form, and appears in larger, and bolder type than previously. This is probably the change that is most helpful to Respondents' cause, but it is still relatively inconspicuous when compared to the rest of the form, and is not sufficient to overcome the overall impression that is likely to be made on some recipients of the solicitation. As was stated before, Respondents' argument that any careful reader should realize that this solicitation is not from a local telephone company, is not a winning argument. This document has the potential to deceive some people, and it is "artfully designed" to do so. See Dynaquest, supra, 12 F.3d at 1146. "Recipients of solicitations, whether careful or careless, have no obligation to critically scrutinize every sentence to determine the nature and source of the yellow page listing being offered." Directory Publishing Services, P.S. Docket No. 38/122 at 14-15 (P.S.D. February 28, 1994).(5)
Finally, Respondents use the name "Tel-Adv Yellow Pages," rather than simply "The Yellow Pages," on their return envelopes and their invoice headings, and ask that checks be made payable to "Tel-Adv Yellow Pages," rather than simply "The Yellow Pages." Again, these changes are helpful, but are not sufficient to dispel the impression that the consumer is dealing with his/her local yellow page directory, once the consumer has that in mind from the initial impression.
Despite these changes, which do bring Respondents' solicitations closer to being a legitimate advertisement, Respondents still do not clearly identify their product. They do not make it clear that the customer is buying a book that is distributed only to others around the country who also buy the book, rather than buying an advertisement to be placed in a directory that will be distributed to all telephone subscribers in the customer's area.
The solicitations that were considered on remand, (Cx-1 through Cx-3), make the representations alleged in paragraph 7a through 7e of the Amended Complaint, and those representations are materially false. The False Representation Order and Cease and Desist Order attached to the original Initial Decision should be applicable to the new solicitations as well as to the originals.
Bruce R. Houston Chief Administrative Law Judge
(a) Upon evidence satisfactory to the Postal Service that any person is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations, . . . the Postal Service may issue an [appropriate] order . . ..
2. References to the transcript are "Tr." References to Complainant's Exhibits will be "Cx_," and Respondent's Exhibits will be "Rx_."
3. The parties stipulated that these exhibits are representative samples of the solicitations and invoices that Respondents have used since late 1996.
4. The exception is representation "f." Although Complainant may have a better argument regarding the new solicitation, in terms of testimony from the consumer witnesses, the difficulty with their argument is that the Complaint itself refers to the invoices as representing that money is due. For the reasons stated in the original Initial Decision (FOF 24-26), I find that this representation is not false.
5. See Cx-5, page 2, in which the correspondent, in his letter to the Chief Postal Inspector, states, "I do not have time to read each piece to see if it is authentic or what."