P.S. Docket No. 3/64
December 08, 1974
In the Matter of the Complaint Against
WISDOM THE WISDOM SOCIETY WISDOM HALL OF FAME WISDOM ENCYCLOPEDIA
9107 Wilshire Boulevard and P. O. Box 4017 at
Beverly Hills, California 90213
P.O.D. Docket No. 3/64;
APPEARANCES:
Thomas A. Ziebarth, Esq.
Law Department
United States Postal Service
Washington, D.C. 20260
for Complainant
Thomas R. Sheridan, Esq.
Lee T. Dicker, Esq.
Simon, Sheridan, Murphy, Thornton
& Hinerfeld
2404 Wilshire Boulevard
Los Angeles, California 90057
for Respondent
POSTAL SERVICE DECISION
History of the Proceeding
This proceeding was instituted under 39 U.S.C. 4005 1/ by the filing of a complaint by the General Counsel in accordance with § 952.5 of the applicable Rules of Practice. 2/ The complaint, filed on December 4, 1970, charged that Respondent is engaged in obtaining remittances through the mail by means of false representations set out in the complaint in connection with granting the "Wisdom Award of Honor".
Respondent denied the essential allegations of the complaint and hearings were held before Hearing Examiner John Lewis. 3/ Briefing before the Hearing Examiner was completed on August 16, 1971. 4/
Administrative Law Judge Lewis 5/ rendered his Initial Decision on April 24, 1973. It upheld the allegations of the complaint and recommended that the Judicial Officer issue a remedial order under 39 U.S.C. 3005.
Respondent having been granted an extension of time to do so, filed an appeal on June 28, 1973. An extension of time was granted to Complainant to respond, and upon receipt of the response Respondent was given permission to make a reply which was received on August 24, 1973.
Throughout the proceedings prior to appeal Respondent appeared through its president, Mr. Leon Gutterman, 6/ without the assistance of an attorney at law. Respondent's appeal brief and reply brief have been submitted through Counsel.
The Wisdom Society
The general nature of Respondent's activities as found by the Administrative Law Judge are:
"1. Respondent 'THE WISDOM SOCIETY' is a nonprofit corporation organized under the laws of the State of California. It has existed at least since October 1957 and its full name is 'The Wisdom Society for the Advancement of Knowledge, Learning and Research in Education'. Leon Gutterman is one of its organizers and is its President. Mr. Gutterman was also the publisher and editor of a periodical known as 'Wisdom Magazine' which was published from about 1956 to 1964. Each of the issues of such magazine featured the life and thoughts of an outstanding personality such as Albert Einstein, Albert Schweitzer, Bernard Baruch, Dr. Jonas Salk, General Eisenhower, David Sarnoff and Nehru of India. In connection with issues of the magazine featuring a living person it was customary to present the individual with a certificate known as the 'Wisdom Magazine Award'. Later the certificates evidencing the award were presented to outstanding personalities not featured in issues of Wisdom Magazine.
"2. During the mid-1960's Mr. Gutterman conceived the idea of publishing a Wisdom Encyclopedia which would include the wisdom and thoughts of outstanding individuals of the past and those of the more modern period. As conceived by him, the photographs, biographies and thoughts of notable individuals would be included in a separate portion of the encyclopedia to be known as the Wisdom Hall of Fame section. In this connection, the practice developed of notifying various individuals by letter that they had been nominated for 'The Wisdom Award of Honor' and would be elected to the 'Wisdom Hall of Fame'. A formal reply card was enclosed with the letter and the nominee was requested 'to acknowledge your nomination and acceptance of the invitation and to confirm your approval of election to the Wisdom Hall of Fame'. The reply card also acknowledged acceptance of 'your cordial invitation to be a Founder of the Wisdom Encyclopedia', and contained the following statement:
'In grateful reciprocation of the privilege of being elected to the Wisdom Hall of Fame, and to express my appreciation for the Wisdom Award of Honor--as well as to show my faith in the future of knowledge and education--I am pleased to enclose my Encyclopedia Founder check for $100, payable to the non-profit Wisdom Society, as my gift, to help the Educators and Editors of Wisdom bring this valuable $1,700,000 Wisdom Encyclopedia to publication, for the advancement of learning and education, and to 'spread wisdom among all people.'
"3. Respondent contends that its letters, cards and other informational material do not involve a solicitation of money which can be considered to constitute a scheme or device for obtaining money or property through the mail within the meaning of 39 U.S. Code 4005 (now 3005), since there is no commercial transaction or sale of a product involved. Without determining at this point whether Respondent has made any false representations in its letters or promotional material, it is clear that it is engaged in soliciting or seeking to induce nominees for the Wisdom Award of Honor to send $100 through the mail. While there may be no commercial transaction or sale of a product involved, and the payment is designated in Respondent's reply card as a 'gift', this is immaterial since there is no requirement in the law that the scheme or device for obtaining money through the mail must involve the quid pro quo of a commercial transaction. It is sufficient to confer jurisdiction if Respondent's operations involve the inducing of individuals to send money through the mail in response to various representations made by Respondent. Moreover, to the extent any quid pro quo may be required to be shown, it is clear that, with monor exceptions which will be hereafter noted, it has been a condition precedent to the receipt of the Wisdom Award in recent years that the individual nominated pay the sum of $100. It is concluded and found, therefore, that Respondent's method of operation involves the solicitation of money through the mail and that Respondent does, in fact, receive money through the mail pursuant to such solicitation." (Initial Decision, pp. 7-10; record references and footnote omitted)
The Charges and the Findings in the
Initial Decision
The complaint charged Respondent with making eight false representations, lettered (a) through (h), each of which the Initial Decision held to have been falsely made. The charged representations are set out separately below with the bases for the findings made by the Administrative Law Judge.
"(a) That the 'Wisdom Award of Honor' enjoys an established and prestigious reputation in educational circles."
Respondent agreed that it makes this representation and asserted that it is a truthful representation.
The Initial Decision, in finding the representation to be false, cited testimony at the hearing to the effect that a spot check 7/ of Who's Who made on behalf of a nominee for the award indicated that recipients of the award listed in Respondent's mailing materials had not listed the awards among the honors they had received and that the Wisdom Award is not listed in any directory of awards. Letters of acknowledgement and appreciation from recipients were not regarded as substantial probative evidence tending to show the award has an established and prestigious reputation in educational circles.
"(b) That there exists a Board of Editors which selects prospective recipients of the 'Wisdom Award of Honor' on the basis of its independent evaluation of their achievements."
Respondent did not deny that it made this representation but contended that such a Board existed for the purpose stated.
Since both the notification letters and the invitation letters state that the addressee has been nominated "by the Board of Editors", the Initial Decision found the representation to be made. Respondent contended the following constituted a Board of Editors: Leon Gutterman, Editor and Publisher, Betty Jane Lang, Editorial Director, and Ernest A. Beck, Consultant to the Editors. However, both Mr. Beck and Miss Lang testified Mr. Beck was not a member. Names are selected by Mr. Gutterman and Miss Lang, each coming Who's Who and similar reference works from which each selects names of individuals for nomination. Each submits his list to the other and unless the latter finds names that are unsuitable, nominations are sent to the persons selected. This procedure has resulted in 20,000 to 30,000 nominations being made during the past few years. The rate of acceptance has generally ranged from 1 to 4 or 5 per cent. The Initial Decision found that Mr. Gutterman and Miss Lang who are substantially the whole Wisdom Society and organization are not a Board of the character represented and further that there is no bona fide selection of nominees on the basis of an objective evaluation of their achievements.
"(c) That the prior 'Eminent Recipients' of the 'Wisdom Award of Honor' named in Respondent's promotional literature were nominated for and have accepted said Award subject to substantially the same terms and conditions as those offered to the present recipients of the solicitations." Respondent denied he made this representation and further contends that in any event that the same essential conditions obtain. the printed acceptance reply card enclosed with the nomination contains the statement quoted on page 4 above agreeing to participate with General Eisenhower and other honorees and founders of the Wisdom Encyclopedia and stating that a $100 remittance is enclosed. The Administrative Law Judge found the reasonable inference to be drawn from the language of the acceptance letter is that the "honored recipients" referred to had participated in the same manner, including making the $100 contribution, as the nominee was being asked to participate. The Administrative Law Judge further found that Respondent did not seriously dispute that present nominees are not being offered the award on substantially the same terms and condition as those whose names are listed in the offering letter and that as a matter of fact when the Wisdom Awards of Honor were first commenced in 1965 no contribution was solicited, and further it was not until the last few years that contributions were solicited at the time of making the award. During that period the list of persons honored included former Presidents of the United States, Justices of the Supreme Court, and other members prominent in government. For the most part the "Eminent Recipients" whose pictures are used by Respondent were not requested to make any contribution as a condition of the award. Only recently has a contribution of $100 been tied to acceptance of the award. Since present nominees are required generally to make a $100 contribution, the representation was found to be falsely made.
"(d) That The Wisdom Society is 'America's most honored Non-Profit Publishing Society of Education'."
The Initial Decision points out that Respondent made representation (d) in the language on the letterhead of the nomination notice, viz.,
"Published by The Wisdom Society for the Advancement of Knowledge, Learning and Research in Education."
The Administrative Law Judge considered Respondent's past activities in publishing the Wisdom Magazine and the book "The Wisdom of Sarnoff and the World of RCA" and the relatively small sporadic effort and consequent uncertain progress in carrying the encyclopedia project forward as hardly justifying claims of fulfillment of the representation and further that the evidence showed Respondent is little known in scholarly circles.
"(e) That The Wisdom Society is actively engaged in education and the publication of Wisdom Magazine and Wisdom Books as well as preparing for the publication of Wisdom Encyclopedia."
Respondent denies that it has represented itself to be "actively engaged" in the described activities and further asserts that it is so engaged. The Administrative Law Judge reviewed Respondent's literature and found it refers to Respondent as the publisher of Wisdom Magazine and Wisdom Books in the context of current activities and repeated reference to Respondent as the publisher of Wisdom Encyclopedia as though it were a current, existing publication or one about to be published.
The Administrative Law Judge found that Wisdom Magazine ceased publication in 1963 or 1964 some six or seven years before the complaint was filed, that Respondent had published but a single "Wisdom Book" and that the encyclopedia not only is far from completion but the work being performed on it is sporadic and minimal. He further found that Respondent's plans for completion are vague and uncertain.
"(f) That the prior 'Eminent Recipients' of the 'Wisdom Award of Honor' named in Respondent's promotional literature are participating with Respondent in the publication of the Wisdom Encyclopedia and have authorized Respondent to use their names, photographs, letters and quotations for and in connection with the present promotional activities on behalf of the encyclopedia.
Respondent in effect denied making the representation as to authorization and insofar as the representation relates to participation he denied that he represents that all participate.
Respondent's letterheads and literature feature the names and pictures of the more prominent prior "eminent Recipients". the form for accepting the award contains the statement that the nominee is "honored to participate with the Eminent Recipients of the Wisdom Award of Honor and Notable Founder of the Wisdom Encyclopedia, such as General Dwight D. Eisenhower". The Administrative Law Judge found that nominees would understand that the prior recipients of the award featured or mentioned are participating in the publication of the encyclopedia and have authorized Respondent to use their names, photographs, and letters in the literature. He concluded, therefore, that Respondent makes representation (f).
The Administrative Law Judge found that of the five "Eminent Recipients" who are listed on Respondent's letterhead, and whose letters (Resp. Exh. 14) were also submitted to establish participation, none had contributed a biography, photograph or a money gift. He also found that the bulk of the "Eminent Recipients" whose photographs are listed in the Wisdom Hall of Fame booklet had not been asked to submit photographs, biographies or a $100 contribution and had in fact been named to the Hall of Fame prior to announcement of the decision to produce an encyclopedia. Under those circumstances, the Administrative Law Judge concluded that those persons are not participants in the encyclopedia. As indicated above, the Administrative Law Judge found that none of the "Eminent Recipients" had expressly authorized the use of his name in Respondent's promotional literature. Some had furnished no material and so could not be considered as having given an authorization. He further found that as to those who had furnished materials, the furnishing was not an authorization to use materials for promotional purposes.
"(g) that more than $1,700,000 has been invested by Respondent in 'the vast research and scholarly development of the Wisdom Encyclopedia'."
Respondent does not deny making representation (g) and the Administrative Law Judge pointed out that the Wisdom Hall of Fame booklet sent to nominees contains the exact language of (g).
The money in question apparently has been expended by Respondent over the years of its existence. However, the Administrative Law Judge found the money had been spent principally for the development of Wisdom Magazine rather than for the encyclopedia.
"(h) That the 'Wisdom Hall of Fame' exists in the form of a particular place of building."
Respondent denied that he makes representation (h), but concedes that no particular place or building constitutes the Wisdom Hall of Fame.
The Administrative Law Judge concluded Respondent made representation (h) primarily through the picture used in promotional literature showing a "building in Greek temple style bearing the legend 'Wisdom Hall of Fame'". In addition, he found references to the Hall in Respondent's literature implied the Hall was a physical thing.
General Exceptions
Delay
Respondent's first exception is to the Administrative Law Judge's undue delay in rendering an Initial Decision. That decision was not issued until 19 months had elapsed from the completion of briefing. Such a period is many times the length of time ordinarily taken to reach an initial decision. Possibly, the length of Respondent's posthearing briefs contributed in some measure to the delay. Whatever the reason, however, the exception is denied because the delay was not prejudicial to reaching the correct decision in this proceeding.
Respondent contends that the delay made the judge less able to recall the events of the hearing, and this impaired his ability to determine the credibility of witnesses. The Initial Decision is detailed and thorough. A study of the transcript does not indicate conflicts in testimony raising substantial questions of the credibility of witnesses except as to the composition of Respondent's purported Board of Editors and there Mr. Beck, the person involved, testified he was not a member and his testimony was corroborated by Respondent's Miss Lang. Review of the carefully written Initial Decision does not suggest any dimming of the judge's recollection of matters of record. Respondent's Counsel alludes to conversations off the record. Such discussions except in unusual circumstances, not shown to exist here, should not be considered in an Administrative Law Judge's Initial Decision.
Respondent also asserts that the pendency of the proceeding over an inordinately long time has been injurious to Respondent's operations. It is contended that such injuries are so substantial that the Postal Service should be precluded from continuing the present proceeding. This proceeding is not for the purpose of determining whether to impose a criminal penalty either under title 18 U.S.C. 1341, the mail fraud law, or under some other penal law. Nor is it for the purpose of determining whether a civil penalty should be imposed on account of past transactions. Rather the purpose of 39 U.S.C. 3005, under which this proceeding is maintained, is to preclude continuance of activities Congress has determined to be deleterious to the public. 8/ The sanction authorized by that law is calculated only to accomplish that result.
The injuries Respondent claims to have suffered by delay are indeed of a serious nature. Yet, even if injury of the character and severity claimed should be established, it would be incumbent on Respondent in order to obtain a dismissal of the complaint in a proceeding under 39 U.S.C. 3005 on that ground to show that the existence of the injuries would warrant a refusal to apply the Congressionally established public policy by not protecting persons solicited by Respondent from being induced to make remittances by means of false representations. That has not been shown.
Standard of Interpretation
Respondent assigns as error that
"The Hearing Examiner interpreted the Wisdom Society materials in light of their effect on the average reader."
However, Counsel points to nothing in the Initial Decision that either states how the Administrative Law Judge applied that test or that states or even implies that he did apply it. Further, the interpretations placed on Respondent's promotional material with possible exceptions indicated below are appropriate. Respondent apparently would have its representations discounted on the basis that sophisticated readers, who he maintains are its average readers, would not believe them completely. That is a different matter from understanding the meaning conveyed. An untrue representation is no less false merely because many of the readers may have the sophistication to disbelieve it in whole or in part. The exception is denied.
Intent
Respondent's third assignment of error is that there was no showing that Respondent has scienter or an intent to defraud.
The exception is clearly without merit. Respondent asserts the evidence clearly establishes that fraud is not here involved. That assertion is correct insofar as it means Respondent is not charged in this proceeding with committing fraud and the proceeding will not determine whether fraud was present in Respondent's activities. On the other hand, the evidence does not establish that fraud was not present. The question here is whether Respondent is engaged in a scheme or device to obtain remittances by means of false representations.
Section 4005 of title 39 U.S. Code under which this proceeding was instituted was amended by P.L. 90-590 on October 17, 1968, primarily to eliminate the words "false or fraudulent pretenses, representations or promises" in favor of "false representations". The Committee report accompanying the legislation to the House floor makes its purpose unmistakable. That report states:
"It is the purpose of this legislation to improve one of the major statutory measures for protecting the consuming public by eliminating the necessity for establishing an 'intent to deceive' in connection with the issuance of mail-stop orders by the Postmaster General under 39 U.S. Code 4005, which are issued to protect consumers who are being victimized by false representations by promoters through the U.S. mails." (H. Rep. 235, 90th Cong., 1st Sess., p. 3)
See also Lynch v. Blount, supra, note 8.
The exception is denied.
Exceptions as to Matters Found
Respondent has taken exception to substantially all of the findings of the Initial Decision given above.
Reputation
Respondent's exceptions 6 and 9 relate to findings in the Initial Decision sustaining the charge that representations (a) and (d) are made and are false.
A review of the record easily establishes the Administrative Law Judge was amply justified in the findings he made with respect to those representations. He relied on the direct testimony of two knowledgeable and independent witnesses. The only attempt Respondent made to counter that evidence was the introduction of letters described on pages 25 and 26 of the Initial Decision. 9/ Their value was appropriately assessed by the Administrative Law Judge and found insufficient to overcome the other evidence.
Few of the letters were from persons other than those featured in issues of the former Wisdom Magazine or who had accepted an award. It is to be expected that the former would be laudatory, and of course those who had remitted $100 presumably did so with the feeling that the award was sufficiently prestigious to warrant that payment. On the other hand not more than approximately 5% and perhaps fewer of the persons nominated accept the award. Thus 95% or more of the nominees presumably do not believe the award is sufficiently prestigious to justify paying in $100.
Board of Editors
As the Initial Decision points out, no formal organization properly denominated as a "Board of Editors" exists. Mr. Gutterman and Miss Lang were the only persons performing editorial work and who substantially comprised the whole organization of the Society. They were the two persons Respondent 10/ has a claim to be considered as constituting the Board of Editors. Under those circumstances, Mr. Gutterman's and Miss Lang's informal operations hardly constituted the activity of a Board of Directors its promotional literature indicated made selections. Further it is clear that the wholesale nominations of as many as 20,000 to 30,000 persons of whom 95% or more declined the honor is not the kind of selection by its Board of Editors Respondent represents to an individual leads to his nomination.
The Administrative Law Judge correctly assessed the situation. The exception is denied.
Prior Recipients
Three of Respondent's exceptions (4, 8 and 11) are directed to the Administrative Law Judge's findings upholding charges (c) and (f) as to representations Respondent is charged with making regarding prior recipients. Essentially the charges are that Respondent represents that all prior recipients received their awards under the same conditions as present awards are made and that prior recipients are founds participating in the publication f the Wisdom Encyclopedia in the same manner as current nominees are requested to participate. The principal stated condition of a current nominee's receipt of the award is making a founder's donation of $100 to the encyclopedia project. He is also requested to submit a photograph and autobiographical material.
Respondent argues in his appeal brief that the Initial Decision did not properly distinguish between the Wisdom Award and the Wisdom Award of Honor. But Respondent has not always regarded the difference between the two as a sharp one. Thus, for example, Mr. Gutterman stated (Tr. p. 559) "It was the Wisdom Award; it was later
-- we added the words 'of Honor'". 11/ Evidence in this proceeding indicates that-- Respondent issued a Wisdom Magazine Certificate of Honor (CX-16) 12/ during a part of the period during which the Magazine was being published (Tr. p. 568; CX-16);
In March 1963 a "Wisdom Award of Honor" (CX-15) was issued by Wisdom Magazine and The Wisdom Society;
"The Wisdom Award" was issued in late 1963 to persons contributing $25.00 (CX-17);
A Wisdom Award of Honor was issued in 1964 or thereabouts to persons renewing their magazine subscription (CX-18 and CX-19; Tr. pp. 570, 571).
In April 1966 Respondent was sending individually addressed letters (CX-21) to individuals notifying them they had been granted an "Award of Honor" accompanied by the award certificate. By June 16, 1969, Respondent was sending individuals letters (CX-22) notifying them of their nominations as recipients of the Wisdom Award of Honor and election to the Wisdom Hall of Fame.
It is clear, therefore, that while a "Wisdom Award" and a "Wisdom Certificate of Honor" were issued during the early 1960's, a Wisdom Award of Honor was issued as early as 1963 and again in 1965 and, of course, the awards were issued in the earlier periods under different conditions than are the awards being made currently.
It is also clear that as found by the Administrative Law Judge that a great many of those persons listed on Respondent's letterhead as recipients of the Award of Honor received their awards under conditions other than those stated in the current notice of nominations and accompanying materials. The representation that the other recipients were honored under the same conditions as a current nominee runs not only to those listed in the "Partial listing" in the Hall of Fame Booklet but also to those represented by the letterhead to be holders of the Award of Honor. No purpose for the extensive list of names is apparent other than to represent that those are the persons with whom the nominee is being invited to associate himself.
Respondent argues that because the testimony indicates that the $100 contribution has been waived in a number of cases, the contribution cannot be considered as a condition precedent to the award. The point, however, is that the nominee is given to understand that the $100 contribution is a prerequisite to receiving the award.
It is undeniable that as found in the Initial Decision a large proportion of the honorees called to a nominee's attention have not made a cash contribution of the character solicited. Further it is clear that the furnishing of pictures and autobiographical material for the "Hall of Fame" was not "participation" on their parts in the publication of the encyclopedia.
Finally, Respondent contends that the Administrative Law Judge advised Respondent an issue on representation (c) was whether Respondent had represented that all recipients participated whereas he found only that Respondent had represented that "substantially all" had participated. Suffice it to say there is no substantial difference betweEn the two formulations.
The second portion of paragraph (f) charges that Respondent represents that prior recipients have authorized Respondent to use their names, photographs and letters in Wisdom's promotional materials. There is no doubt that authorization was neither requested nor specifically granted. The representation that persons had authorized the use of their names, etc., in promotional literature must be derived, if at all, from the use of the names, etc., coupled with the representations those persons are participating in the project.
The inference that Respondent's right to use the names, etc., came from authorization of the honorees rather than from some other legal authority is uncertain. Accordingly, Respondent's exception to the finding as to that portion of (f) is allowed, but the exception to (c) and to the first part of (f) is disallowed.
Actively Engaged
Paragraph (e) of the complaint charges Respondent with representing it is engaged actively in education and the publication of Wisdom Magazine, the Wisdom Books and the Wisdom Encyclopedia.
Respondent denies that it represents itself to be actively engaged in those activities. Further, while it does not claim to be presently engaged in publishing either the magazine or the Wisdom
Books, it does contend that it is currently and actively engaged in the work of publishing the encyclopedia and consequently to be engaged in education.
Several editions of the booklet "Wisdom Hall of Fame," Respondent's major promotional publication, are in evidence. On page 2 of that booklet a paragraph headed "The Wisdom Society" purports to describe Respondent's purposes and activities. In earlier editions 13/ that paragraph contains the following: "It publishes Wisdom Magazine, Wisdom Books, and the Wisdom Encyclopedia." In the most recent edition 14/ in evidence the corresponding sentence is "It is the publisher of Wisdom Magazine, Wisdom Books, and the Wisdom Encyclopedia." The earlier statement unambiguously places the activities in the present. The revision does introduce some ambiguity. Nevertheless in the context in which it appears, the sentence still purports to describe Respondent's current activities. Since the publication of the magazine and the Wisdom Books had been abandoned some years before the complaint was filed, it is clear that the representation is false in respect to publishing those materials.
A further question is whether Respondent is entitled to describe itself as the publisher of the encyclopedia. Complainant contends the completion of the work is so far in the future and so uncertain that Respondent is not justified in representing itself now to be "the publisher". On the other hand Respondent would consider itself to be "the publisher" so long as it keeps the project alive by making some progress regardless of how far away the projected completion date may be.
While, as stated above, the sentence in the booklet making the representation that Respondent is the publisher imports a current status, that representation is modified insofar as the encyclopedia itself is concerned by the terms of the solicitation itself. The acceptance card solicits the nominee to become a "founder" of the encyclopedia and the $100 contribution is asked for the work of the encyclopedia project. Thus, the nominee is in effect told that further effort is needed before the encyclopedia can be published. It follows, therefore, that Respondent is not representing the publication date for the encyclopedia is imminent. Since Respondent is continuing work on preparing the encyclopedia for publication, it is not established that Respondent is not the future publisher of the encyclopedia, even though progress is being made slowly.
Respondent falsely represents itself to be currently engaged in publishing Wisdom Magazine and Wisdom Books as charged in paragraph (e) but it has not been established that it makes a false representation as to publication of the encyclopedia.
$1,700,000 Expenditure
Respondent directly represents that it has invested more than $1,700,000 in research and scholarly editorial development of the encyclopedia. What appears is that Respondent has spent that sum in the publication of Wisdom Magazine. Respondent contends that because much of the material to be included in the encyclopedia will be drawn from the Wisdom Magazine it is entitled to regard the cost of producing the magazine as part of the cost of development of the encyclopedia.
Respondent produced some evidence that it conducted a research program broader than was warranted by the needs of the magazine project. Nevertheless Respondent's primary effort during the period the magazine was published was in promoting and publishing the magazine. Consequently, much of the money expended was invested in the magazine venture 15/ resulting in the publication of 40 volumes from which it presumably recovered at least a portion of the money spent. It follows that substantially less than the quoted amount has been "invested by Respondent in 'the vast research and scholarly development of the Wisdom Encyclopedia'", and the representation that it had done so is false.
Place
Respondent's brief on appeal asserts that the Wisdom Hall of Fame booklet has always included the following language indicating the true nature of the Hall of Fame:
"The Wisdom Hall of Fame will be published in the Wisdom Encyclopedia. Included in the Encyclopedia (see inside back cover for detailed information) will be a special section titled, 'Wisdom Hall of Fame.' In these pages will be included the names, photographs and biographical sketches of the most respected and admired men of our time, from all professions and meritorious fields of endeavor--men who have been elected to the Wisdom Hall of Fame. They are recipients of the Wisdom Award of Honor, and Founders of the Wisdom Encyclopedia. These are men truly worthy of permanent tribute and honor, for having helped to make our nation great in the finest American tradition."
That language appears in the most recent edition of the booklet in evidence, 16/ but it does not appear in earlier editions. 17/ The latest edition also modifies other language of the booklet. For example, the last sentence of the passage quoted on page 23 of the Initial Decision begins "In the Wisdom Hall of Fame are inscribed the names". It now begins "Inscribed in the Book of the Wisdom Hall of Fame are the names." Thus, the booklet does not now imply that the Hall of Fame is a place or building. Normally revision of promotional material after a proceeding had been commenced would not be a basis for disregarding representations in earlier versions. However, in view of the length of time that has now elapsed since the revision was made, the effect of the earlier representations may be considered to have dissipated by this time. Since the Initial Decision placed primary reliance on the booklet to find Respondent made representation (h), the finding that it is made is reversed and the exception with respect to it is sustained.
Conclusion
Except to the extent they are allowed above, Respondent's exceptions to the Initial Decision and recommendations therein are denied. A remedial order under 39 U.S.C. 3005 is being issued contemporaneously with this decision.
01/08/74
Wenchel, Adam G.
____________________
1/ Since the filing of the complaint the Postal Reorganization Act, P.L. 91-375 revised and reenacted title 39 U.S. Code. Section 4005 was reenacted without substantial change as 39 U.S.C. 3005.
2/ The Rules of Practice are set out in 39 C.F.R. Part 952.
3/ For Respondent's convenience the hearings were held in Los Angeles, California. They continued for five days between April 26 and May 5, 1971, resulting in a transcript of 723 pages. In addition numerous exhibits were received in evidence.
4/ Complainant's Brief and Proposed Findings and Conclusions consisted of 20 pages. Respondent's Brief and Proposed Findings and Reply Brief totaled 101 pages.
5/ The title of Hearing Examiner had been changed to Administrative Law Judge after the hearings in this proceeding.
6/ Since the Wisdom Society is substantially embodied in Mr. Gutterman, references made hereafter to "Respondent" sometimes relate to Mr. Gutterman.
8/ See Lynch v. Blount, D.C.S.D.N.Y., 330 F.Supp. 689 at 693. Aff'd 404 U.S. 1007
9/ On appeal Respondent contends that he was precluded from putting into the record additional letters of the same character. The approximate 119 letters comprising Respondent's Exhibits 10, 12, 14-16 are sufficient to establish the character of correspondence received and are many times the number the Administrative Law Judge indicated was appropriate. Not only was that number received without question, but Respondent does not appear to have availed himself of the opportunity granted by the judge (Tr. p. 222) to have additional letters listed for the record.
10/ Mr. Ernest A. Beck who was stated to be a Board member testified he was not (Tr. p. 376) and that while he sometimes advised Respondent, he did not give advice concerning persons to be nominated (Tr. p. 377).
"But the award was the award presented by Wisdom.
"Q So the award which is characterized today as the Wisdom Award of Honor was at that dinner called the Wisdom Award, or the Wisdom Magazine Award?
"A Or the Wisdom Magazine Award.
"But it was not; it was not the same Wisdom Award as we have today in 1970."
12/ Complainant's exhibits in evidence are designated by the symbols CX; references to pages of the transcript are designated by Tr.
15/ As the Initial Decision points out Respondent's accountant found the $1,700,000 was spent "for educational research, editorial preparation, development and production of the 40 volumes of Wisdom Magazine." (CX-6)