Directory Publishing Services, Inc. v. Runyon

851 F. Supp. 484, 1994 U.S. Dist. LEXIS 6250, 1994 WL 190036

• Court: District Court, District of Columbia
• Decided: April 18, 1994
• Docket: Civ. A. 94-0640 HHG
• Status: Published

Opinion

OPINION

HAROLD H. GREENE, District Judge.

In this action, plaintiffs seek an order from the Court enjoining defendants from enforc­ing a Cease and Desist Order and several False Representation Orders issued by a postal service judicial officer pursuant to 39 U.S.C. § 3005. 1 After a hearing held on March 28, 1994, the Court issued a Tempo­rary Restraining Order requiring the postal service merely to detain the mail covered by the False Representation Orders, as opposed to returning the mail to its senders, pending the Court’s decision on plaintiffs’ motion for a preliminary injunction. The parties subse­quently agreed to extend the effect of the Court’s Order through April 14, 1994, in or­der to allow the Court to consider the entire administrative record and the parties’ writ­ten submissions, as well as to allow for a further hearing.

The case again came before the Court for a hearing on plaintiffs’ motion for a prelimi­nary injunction and defendants’ motion for summary judgment on April 14, 1994. With the benefit of the parties’ written submis­sions and oral arguments, and based upon the entire record in this case, the Court previously denied plaintiffs’ motion for a pre­liminary injunction. Moreover, the Court concluded that there were no genuine issues of material fact and that defendant was enti­tled to judgment as a matter of law. See Fed.R.Civ.P. 56(c). This Opinion sets forth the bases for the Court’s decision. 2

I

This proceeding has its genesis in a postal service complaint filed October 29, 1991, al­leging that plaintiffs had violated 39 U.S.C. § 3005 by engaging in a scheme for obtaining money or property through the mail by means of false representations. The com­ plaint alleged that plaintiffs’ mailings, which consisted of unsolicited promotions for busi­ness telephone listings in plaintiffs’ upcoming “statewide” yellow pages, contained seven false representations.

On July 24, 1992, an administrative law judge (“ALJ”) issued an opinion upholding the postal service as to five of the alleged false representations. On February 28,1994, a postal service judicial officer issued the agencies’ “final decision” upholding the deci­sion of the ALJ with respect to four of the allegedly false representations as follows:

1. the addressee had previously autho­rized a business listing in plaintiffs’ tele­phone directory;

2. plaintiffs are the publishers of the business phone directory or “yellow pages” customarily supplied to telephone subscribers in the recipient’s area;

3. the area of distribution of plaintiffs’ directories is the same as the one in which the recipient already has a listing; and

4. plaintiffs have previously published a directory. 3

Accordingly, the judicial officer issued the Cease and Desist Order and False Represen­tation Orders at issue.

Plaintiffs then commenced the instant ac­tion seeking this Court’s review of the agen­cy decision pursuant to the Administrative Procedure Act, 5 U.S.C. § 706(2), and a per­manent injunction prohibiting the postal ser­vice from enforcing its orders. At bottom, plaintiffs claim (1) that they have been de­nied due process based upon procedural er­rors at the administrative level, and (2) that the agency decision is not supported by sub­stantial evidence and is contrary to law.

II

The Court rejects plaintiffs’ argument that procedural errors have infected the ad­ministrative decision in such a way as to deny them ’due process of law. “The funda­mental requirement of due process is the opportunity to be heard ‘at a meaningful time and in a meaningful manner.’” Mathews v. Eldridge, 424 U.S. 319, 333, 96 S.Ct. 893, 902, 47 L.Ed.2d 18 (1976) (citing Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed.2d 62 (1965)). A review of the administrative record satisfies the Court that this standard has been amply met in this case.

Plaintiffs’ contention that lay testi­monials were improperly admitted as evi­dence of the efficacy or quality of plaintiffs’ product is incorrect. See 39 C.F.R. § 952.-­18(f) (lay testimonials inadmissible as evi­dence of efficacy or quality of items sold through mails). The testimony of which plaintiffs complain dealt not with the efficacy of plaintiffs’ product, but with the potential deception stemming from plaintiffs’ solicita­tion of the product. In other words, the efficacy of the actual product is irrelevant if the reader of the solicitation is given the impression that the product is something oth­er than what it actually is. See also part III A, infra.

Likewise, plaintiffs’ contention that the proceedings were tainted by the admis­sion of hearsay testimony is without merit. The use of hearsay testimony in administra­tive proceedings, where relevant and materi­al, is widely accepted. See Veg-Mix, Inc. v. U.S. Dept. of Agriculture, 832 F.2d 601, 606 (D.C.Cir.1987); Hoska v. U.S. Dept. of Army, 677 F.2d 131, 138 (D.C.Cir.1982); see also 39 C.F.R. § 952.19(a). Thus, although some of the testimony of which plaintiff complains may be viewed as hearsay, the Court is satisfied that the evidence was properly ad­mitted. Moreover, it is abundantly clear that this evidence was not essential to the find­ings of the ALJ and Judicial Officer. 4

Finally, the Court rejects plaintiffs’ claim that defendants should not have been allowed to amend the administrative com­plaint at the hearing. Postal service regula­tions provide that:

a party may move to amend a pleading at any time prior to the close of the hearing and, provided that the amendment is rea­sonably within the scope of the proceeding initiated by the complaint, the presiding officer shall make such ruling on the mo­tion as he deems to be fair and equitable to the parties.

39 C.F.R. § 952.12(b).

The postal service complied with this pro­cedure by orally moving to amend the com­plaint to name additional related parties and addresses. The amendments were unques­tionably within the scope of the proceed­ings—adding no new substantive allegations. Plaintiffs do not contest that they were doing business under the additional names and ad­dresses. Thus, it is patently obvious that this amendment resulted in no substantive change in the charges in the complaint and resulted in no prejudice. The presiding offi­cer acted within his discretion in allowing the amendment.

Ill

Having rejected plaintiffs’ claims of procedural error, it remains the duty of the Court to review the administrative record as a whole to determine if the decision of the postal service is supported by substantial evidence. Dynaquest Corp. v. U.S. Postal Service, 12 F.3d 1144, 1145 (D.C.Cir.1994); American Testing Institute v. U.S. Postal Service, 579 F.Supp. 1345, 1349 (D.D.C.1984) (court’s review confined to determination of whether, based on record as a whole, there is substantial evidence to support the agency’s factual findings and whether errors of law have been committed). “Substantial evi­dence,” in this context, is “such relevant evi­dence as a reasonable mind might accept as adequate to support a conclusion.” Consoli­dated Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126 (1938); Dynaquest Corp. v. U.S. Postal Service, su­pra, 12 F.3d at 1146. Thus, even if a court might reach a conclusion inconsistent with or contrary to that of the agency were the Court making the initial determination, the agency decision must be upheld if supported by adequate evidence. See Illinois C.R.R. Co. v. Norfolk & W.R.R. Co., 385 U.S. 57, 69, 87 S.Ct. 255, 262, 17 L.Ed.2d 162 (1966).

Applying this deferential standard of re­view in this case, the Court concludes that the final decision of the postal service is supported by substantial evidence in the ad­ministrative record as a whole and that the Cease and Desist and False Representation Orders must stand. Therefore, the Court will only briefly address each of the allegedly false representations upheld by the Judicial Officer. 5

A. The Addressee Had Previously Autho­rized A Business Listing In Plaintiffs’ Telephone Directory.

Although it is impossible to point to one isolated statement in the solicitation or other single piece of evidence in the record that supports the conclusion that this misrepre­sentation was made, the Court is satisfied that the record as a whole contains such evidence that a reasonable mind might accept as adequate. Foremost in this regard is the solicitation itself, which contains a number of factors that, in the aggregate, could be viewed as resulting in this misrepresentation. These include use of the familiar “Yellow Pages” term and walking fingers logo, which are used by other publishers with which re­cipients may have had prior listings, the offer of a free “white pages” listing, which is com­mon in many other publications, the notation of a “record no.,” which could be construed as evidence of an existing account with the solicitor, and the use of terms such as “next listing” and “in the forthcoming edition,” which could be construed as evidence that the solicited listing is merely a renewal of a prior listing. 6 Although none of these fac­tors, standing alone, make an explicit misrep­resentation, the postal service’s determina­tion is appropriately based upon the solicita­tion as a whole.

Plaintiffs find numerous errors in the approach and conclusion of the ALJ and Judicial Officer in the administrative pro­ceedings. First, plaintiffs contend that far too much reliance was placed on the ALJ’s own interpretation of the solicitation, without any expert testimony as to the solicitation’s effect on its readers. It is clear, however, that the postal service, and consequently the ALJ, is entitled to draw upon its own expert understanding of the impact of the solicita­tion on consumers. This is true both as to determining whether a representation was made as well as whether the representation was false or misleading. Dynaquest Corp. v. U.S. Postal Service, supra, 12 F.3d at 1149. Moreover, the ALJ’s consideration of the solicitation was not made in a vacuum, but instead considered the solicitation along with the testimonial and other evidence in the record.

Plaintiffs also argue that the ALJ erred in applying the “ordinary reader” stan­dard to the solicitation which was, after all, targeted at businesspersons. Plaintiffs again miss the mark. The administrative decisions clearly recognize that the targets were busi­nesses. However, we are not here necessari­ly dealing with IBM and Exxon. Instead, the recipients included businesses both large and small. Plaintiffs unquestionably under­stood that their solicitations would be re­ceived and scrutinized not only by lawyers and accountants, but would also be received by small merchants, restaurant owners, me­chanics, etc.—those potentially less accus­tomed to the need to “read between the lines.” As our Court of Appeals has stated, the “question turns on the effect of the rep­resentation on the mind of the ordinary sub-­ject_” Id. at 1147. The record amply supports the conclusion that the ALJ was aware of the “ordinary subject” of the solici­tation and made his determination with such subjects in mind.

Finally, and probably most im­portantly in the view of plaintiffs, it is argued that the ALJ erred in considering the use of the term “Yellow Pages” and the walking fingers logo in the solicitation. This error is patent, plaintiffs claim, because both the words and the logo are “generic terms” which are dedicated to the public domain and may be used by anyone. 7 Therefore, it is argued that by considering plaintiffs’ use of these generic terms in the solicitation, the postal service and ALJ are wrongfully pre­venting plaintiffs from using the generic terms.

Once again, however, plaintiffs’ argument proves too much. The record and adminis­trative decisions again amply demonstrate that the ALJ and Judicial Officer understood the implications stemming from the use of the generic terms. It is equally clear that it is not the use of the terms themselves that has been prohibited. Instead, it is the net impression of the solicitation, including the use of the generic terms, that is dispositive. Although the use of the term and logo did figure prominently in the conclusions of the ALJ and Judicial Officer, as noted above, this was not the only factor.

Notwithstanding plaintiffs’ protests to the contrary, the record, as well as common sense and everyday experience, supports the proposition that the term “Yellow Pages” may acquire a more specific meaning in the minds of many of those solicited. It does not follow, of course, that this meaning is re­stricted to only the “big players” such as the Bell Regional Operating Companies and AT & T, as plaintiffs would have the Court be­lieve. Instead, it is reasonable to conclude that the common understanding is of a direc­tory of a local nature, regardless of the pub­ lisher, to which those within a community can turn to locate services and products within reasonable geographic proximity. Upon even a cursory review of plaintiffs’ “state­wide” directories it becomes obvious that this is a different animal entirely. Thus, al­though plaintiffs are not precluded from us­ing the term “Yellow Pages” and the walking fingers logo, their solicitation as a whole must not give the impression that the prod­uct is something other than what it is.

Without belaboring the point of why plain­tiffs’ use of the generic terms in the instant solicitation, although not forbidden, may con­tribute to the overall misrepresentation, the following hypothetical example may be help­ful.

Plaintiffs have cited the Court to Blau Plumbing, Inc. v. S.O.S. Fix-It, Inc., 781 F.2d 604, 609 (7th Cir.1986), in which it was noted: “Imagine being forbidden to describe a Chevrolet as a ‘car’ or an ‘automobile’ because Ford or Chrysler or Volvo had trademarked these generic words....” The Court agrees, of course, that such a prohibi­tion would indeed by quite improper and unfair.

However, we might consider instead the prominent and repeated use of the word “automobile” in an advertisement for a recre­ational go-cart. Although such a vehicle might, in a technical sense, qualify as an automobile, 8 it is hardly what most recipients of such an advertisement would describe as an “automobile.” Thus, although the pro­moter of the go-cart might indeed be entitled to use the generic term, it is nevertheless the promoter’s obligation to present the adver­tisement as a whole in such a way as to make it clear that the product is not a full-sized, road-safe, multiple-passenger-carrying “auto­mobile.” Likewise, it is the obligation of plaintiffs’ in the instant ease to distinguish its product from those commonly associated with the “Yellow Pages” term and walking fingers logo by the advertisement’s recipi­ent. 9

B. Plaintiffs Are The Publishers Of The Business Phone Directory Or “Yellow Pages” Customarily Supplied To Tele­phone Subscribers In The Recipient’s Area.

This conclusion is supported by essentially the same factors as described above. Among these, the use of the term “Yellow Pages” and the walking fingers logo are most promi­nent. Unrefuted witness testimony exists on this very point.

C. The Area Of Distribution Of Plaintiffs’ Directories Is The Same As The One In Which The Recipient Already Has A Listing.

Here again, the representation is sup­ported by essentially the same factors. Al­though the Court finds that this conclusion is the weakest when considering only the solici­tation itself, the record as a whole sufficiently supports the conclusion—particularly when considering the misrepresentations already found. That is, if a recipient believes that the solicitation is for the yellow pages in which it currently has a listing and is the yellow pages customarily supplied to tele­phone subscribers in the recipient’s business area, this representation would follow. The testimonial evidence cited by defendant also provides substantial evidence in support of this conclusion.

D. Plaintiffs Have Previously Published A Directory.

This representation is the one most ade­quately supported by reference to the solici­tation itself, with no further review of the record necessary. The use of terms such as “next edition” and “forthcoming edition” as well as the representation that the directory “is published and distributed annually,” as opposed to “will be published and distributed annually,” give the unmistakable impression that the directory has been previously pub­lished. It is undisputed that this was not the case in many instances. This representation also follows from those previously found.

IV

As is often the case in actions seeking the review of administrative findings, the Court might well take a slightly different or even contrary view if it were its responsibility to make the initial findings of fact and conclu­sions of law. That is, of course, not its function. Instead the Court must review the record for substantial evidence supporting the administrative conclusions. In this case, such evidence exists.

The Court has previously issued an Order on April 14, 1994, consistent with the forego­ing.

1 . The Cease and Desist Order forbids plaintiffs from making certain representations, discussed in detail below, in any materials that seek the remittance of money or property through the mail. The False Representation Orders autho­rize postmasters to return to senders mail sent to plaintiffs' specified addresses and to mark such mail "Returned To Sender Due To Adressee’s Violation of Postal False Representation Law.” However, the False Representation Orders do provide plaintiffs with 48 hours to examine any mail received for the addresses to determine whether it is unrelated to the allegedly false representations.

2 . Because the Court has concluded that defen­dant is entitled to a decision on the merits, no detailed discussion of plaintiffs’ request for a preliminary injunction is required.

3 . The postal service does not allege that these are direct quotes from plaintiffs' solicitations. In­stead, they represent only allegations made by the postal service regarding the representations implicit in the solicitations, as vie.wed by its ordinary recipients.

4 . The Court also rejects plaintiffs' insinuation of a sinister motive behind the failure to testify of Tracy Bejarano. It is clear that witness Brian Holmes was qualified by first hand knowledge to testify at the hearing and that the testimony of Ms. Bejarano, his employee, would have been essentially cumulative.

5 . Although the Court agrees that each of the four allegedly false representations is supported by substantial evidence in the record, the Court notes that a decision upholding any one of the • four would preclude the injunctive relief that plaintiff seeks with respect to the False Represen­tation Orders because any one of the four, even standing alone, would be material. In other words, whether the solicitation in question con­tained one or four false representations is ulti­mately irrelevant because the postal service would be justified in enforcing the False Repre­sentation Orders in any event.

6 . Of course, there was also substantial testimoni­al evidence supporting the conclusion of the ALJ regarding the effect of the solicitation on its readers.

7 . "Generic terms” are those that refer to a kind of product as opposed to a specific brand. See, e.g., Liquid Controls Corp. v. Liquid Control Corp., 802 F.2d 934, 936 (7th Cir.1986).

8 . It is, after all, a four-wheel vehicle propelled by an internal-combustion engine using a volatile fuel. See Webster's Collegiate Dictionary 118 (9th ed. 1988).

9 . Of course, it is additionally the obligation of the promoter in the Court's hypothetical not to give the impression that its go-cart is in fact a Chevro­let, Ford, Chrysler or Volvo, just as it is the obligation of the plaintiffs in the instant action not to give the impression that its yellow pages are published by a Regional Operating Company, AT & T or Donnelley.