United States v. Outpost Development Corp.

369 F. Supp. 399, 1973 U.S. Dist. LEXIS 12123
CourtDistrict Court, C.D. California
DecidedAugust 28, 1973
DocketCiv. 73-16-FW
StatusPublished
Cited by7 cases

This text of 369 F. Supp. 399 (United States v. Outpost Development Corp.) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Outpost Development Corp., 369 F. Supp. 399, 1973 U.S. Dist. LEXIS 12123 (C.D. Cal. 1973).

Opinion

WHELAN, District Judge:

In this action plaintiffs seek a preliminary injunction directing the detention of defendant’s incoming mail involving orders and money mailed by members of the public to defendant in response to defendant’s advertising hereafter described by the Postmaster pending the conclusion of a statutory administrative proceeding under 39 U.S.C. § 3005 and any appeal therefrom. The provisions of 39 U.S.C. § 3007 under which plaintiffs seek relief provide that such injunction may issue where there has been a showing before the court that there is probable cause to believe that 39 U.S.C. § 3005 is being violated. Defendant has filed an answer and a cross-complaint by which it contends that 39 U.S.C. § 3005 and 39 U.S.C. § 3007 are unconstitutional and that this Court should not issue any injunction directing the detention of mail but rather should enjoin the Postmaster from proceeding with the administrative hearing. This Court has jurisdiction as a three-judge Court under 28 U.S.C. § 2282 and under 28 U.S. C. § 1339 and 39 U.S.C. § 3007.

Section 3005 in pertinent part provides that 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 false representations, the Postal Service may issue an order which

(1) directs the Postmaster of the Post Office at which mail arrives, addressed to such person, to return such mail to the sender appropriately marked as in violation of this section, if the person is first notified and given reasonable opportunity to be present at the Post Office to survey the mail before it is returned to sender, and

(2) forbids the payment by a Postmaster to the person of any money order or postal note drawn to the order of such person and provides for the return to the remittur of such sum.

The proceeding initiated by the Postal Service to determine whether or not defendant is violating Section 3005 has not been concluded.

Before the convening of a three-judge Court, the single judge had issued an injunction pursuant to the provisions of 39 U.S.C. § 3007 but stayed the execution of the injunction pending the hearing and determination of ease by the three-judge Court.

This action came on for hearing before this Court upon cross-complainant’s motion for preliminary injunction. At the hearing it was stipulated by the parties that the hearing constitutes a trial upon the merits. Thus the case is now before this Court on the application of plaintiffs for an injunction detaining defendant’s before-described mail pending the determination of the Section 3005 proceeding and on the application by cross-complainant for an injunction enjoining the holding of such proceeding.

There was received in evidence at the trial a copy of defendant’s advertising brochure and a copy of a small booklet entitled “My Secret”. The parties respectively offered in evidence affidavits, *401 but the Court considers that the affidavits other than the affidavit establishing that defendant’s advertising material has been mailed through the United States mails, are immaterial to the issues before it. After oral argument supplementing written argument theretofore filed by the parties, the cause was submitted for decision.

This Court finds that the advertising utilized by defendant advertises a product, i. e., a tonic, even though the customer responding to defendant’s solicitation receives in return for his money the booklet entitled “My Secret”. The advertising material of defendant was mailed through the United States mails.

We shall first consider defendant’s contentions respecting Section 3005. Section 3005 is not unconstitutional when, as here, defendant has made false representations concerning a product. Defendant’s contention that the advertising advertises a booklet is without merit, for a fair reading of the advertising is to the contrary. It is already established that the First Amendment does not protect such a scheme to defraud. Lynch v. Blount, 330 F.Supp. 689 (S.D.N.Y.1971), aff’d, 404 U.S. 1007, 92 S.Ct. 673, 30 L.Ed.2d 656 (1972); United States Postal Service v. Beamish, 466 F.2d 804 (3d Cir. 1973). Defendant’s contention that Section 3005 violates the First Amendment in that it does not provide for a prior judicial adjudication and does not require the United States to take the initiative promptly in such a proceeding in which the Government has the burden of proof is also without merit. Lynch v. Blount, supra. Thus, defendant and cross-complainant is not entitled to an injunction enjoining the holding of the Section 3005 proceeding.

Next we consider whether or not Section 3007 is in violation of defendant’s First Amendment rights in that an injunction granted pursuant to such section would be in force pending the determination of the Section 3005 administrative proceeding and would thus detain defendant’s incoming mail sent in response to defendant’s advertising prior to the time of an administrative decision concerning the advertising. Initially it should be noted that such a statutory scheme as is encompassed by Section 3007 is not novel in nature. The provisions of the Taft-Hartley Act, 29 U.S.C. Sections 160 (j) and 160 (l), specifically give to a District Court jurisdiction to issue a preliminary injunction at the request of the National Labor Relations Board or its regional counsel or other officer, enjoining labor practices complained of to the National Labor Relations Board as being illegal or reasonably believed by its such officer or counsel to be illegal after investigation pending the determination by the National Labor Relations Board as to whether the activity complained of in fact constitutes an illegal activity.

Where an injunction is sought under Section 3007, a showing must be made to the Court that there is probable cause to believe that the person against whom the detention order is sought is violating the provisions of Section 3005. This showing is analogous to the showing that must be made to the Court to justify the issuance of a Taft-Hartley injunction.

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Bluebook (online)
369 F. Supp. 399, 1973 U.S. Dist. LEXIS 12123, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-outpost-development-corp-cacd-1973.