In the Matter of the Complaint Against

ELECTRONIC DEVELOPMENT LAB
P. O. Box 1560 at
Pinellas Park, FL 33565-0000

P.S. Docket No. 18/157

09/06/85

Cohen, James A.

APPEARANCES FOR COMPLAINANT:
H. Richard Hefner, Esq.,
Gregory S. Morrell, Esq.
Consumer Protection Division
Department Law
United States Postal Service
Washingon, DC 20260-1112

APPEARANCE FOR RESPONDENT:
John A. Field, III, Esq.
Field & Halfhill King Street
Alexandria, VA 22314-3014

POSTAL SERVICE DECISION

The Consumer Protection Division, Law Department, United States Postal Service, (Complainant) has appealed from an Initial Decision of an Administrative Law Judge dismissing its Complaint alleging that Respondent is engaged in a scheme or device to obtain money through the mail in violation of 39 U.S.C. 3005. In a "Cross Appeal and Reply to Complainant's Exceptions," Respondent takes exception to certain findings in the Initial Decision, but otherwise requests the decision be upheld.

Background

The Complaint initiating this proceeding alleges that Respondent makes materially false representations regarding its

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work-at-home program assembling printed circuit boards. Specifically, the Complaint alleges in paragraphs 5 and 6 that Respondent, by means of advertisements in publications of general circulation and follow-up circulars, falsely represents expressly or impliedly, "5. . .directly or indirectly, in substance and effect, whether by affirmative statements, omission or implication that:

(a) Persons with no experience or training in the field of electronic assembly will be able to profitably participate in Respondent's program.

(b) The material furnished by Respondent is adequate to assure that persons without prior experience or training in the field of electronic assembly will be able to successfully participate in Respondent's program.

(c) Participation in Respondent's program will assure a reliable extra income or full time livelihood.

(d)Respondent will purchase printed circuit boards assembled by participants in the program.

(e) The requirement for membership in American Electronic Assembly Associates (AEAA) has been established by an outside authority as a prerequisite to participation in Respondent's program.

In a timely filed Answer Respondent generally denied the allegations of the Complaint. In addition, Respondent denied that attachments to the Complaint which were alleged to be typical of its promotional materials were currently in use. At a hearing before an Administrative Law Judge both parties presented documentary evidence and Complainant presented the testimony of three witnesses. Respondent called no witnesses.

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Following the submission of proposed findings of fact and conclusions of law by the parties, the Administrative Law Judge issued an Initial Decision in which he found Respondent makes the representations alleged in subparagraphs 5(a) through (d) of the Complaint but that Complainant had failed to sustain its burden of proving the falsity of those representations. The Administra tive Law Judge further concluded that Respondent does not make the representation alleged in subparagraph 5(e) of the Complaint and that in any event, the representation is not material as an inducement to join Respondent's program. Based on his findings that Complainant had not established the falsity of the alleged misrepresentations, the Administrative Law Judge dismissed the Complaint.

Exceptions

Both parties have taken exception to the findings and con clusions of the Administrative Law Judge. Complainant contends the Administrative Law Judge improperly evaluated the testimony of its witnesses and erroneously concluded that it had not sus tained its burden of proving the falsity of the representations. Respondent contends the Administrative Law Judge incorrectly concluded that it distributes certain of the promotional materials which are included in the record and erred in finding that it makes the representations alleged in subparagraphs 5(a) - (d) of the Complaint.

In its reply to Complainant's exceptions Respondent argues that the "substantial evidence" or "clearly erroneous" standard

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should be applied by the Judicial Officer in reviewing the Initial Decision on appeal. However, as held in previous cases the proper standard to be applied in the review of an Initial Decision involving an alleged violation of 39 U.S.C. 3005 is the preponderance of evidence standard. See e.g., Stannis Research International, P.S. Docket No. 17/60 (P.S.D. July 30, 1984); TELEX & twx Directory, P.S. Docket No. 13/6 (P.S.D. April 1, 1983), and cases cited therein at pp. 5-7.

COMPLAINANT'S EXCEPTIONS

Complainant takes specific exception to Finding of Fact 8, to the weight and interpretation given to Findings of Fact 9 and 10, and to Conclusion of Law 1. All of these exceptions relate to its contention that the Administrative Law Judge erred in concluding that it had not sustained its burden of proof as to the falsity of the representations alleged in subparagraphs 5 (a) through (d) of the Complaint (I.D. at 9).

While the record supports the Administrative Law Judge's finding, based on the testimony of Complainant's witness, Peter R. Peterson, that lay persons with technical inclination or a certain amount of determination could figure out how to successfully assemble Respondent's circuit boards, the record does not support a finding that this can be done profitably on a part-time basis or as a full-time business. The record is uncontradicted with regard to the experience of two persons who tried and were dissatisfied with Respondent's program. Their testimony and Mr. Peterson's testimony concerning the usefulness

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of the printed circuit boards is persuasive that the program most probably would not be profitable. Furthermore, the uncontradicted testimony of one of Complainant's witnesses (Watts, Tr. pp. 24-39) concerning his assembly and testing of one of Respondent's boards constitutes a prima facie showing that Respondent does not purchase the assembled printed circuit boards. Evidence to the contrary with respect to these matters was solely within the possession of Respondent who, although given a full opportunity, did not rebut Complainant's prima facie case. See Delta Enterprises, P.S. Docket Nos. 14/72, 73 & 74 (P.S.D. July 3, 1984). Accordingly, the Initial Decision is reversed with respect to the findings and conclusions relating to the falsity issue with respect to paragraphs 5(a) - (d) of the Complaint.

Respondent's Exceptions

Respondent argues that its current promotional materials do not make the representations alleged in the Complaint. A review of Respondent's promotional materials, both those it contends are currently used and those which it argues are no longer used, supports the Administrative Law Judge's conclusion that Respondent makes the representations alleged in paragraphs 5 (a) - (d) of the Complaint.

Respondent argues that certain of the advertising materials are no longer used and therefore should not be considered in this proceeding. If Respondent's argument was accepted it would be free to resume the representations it previously used after the

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conclusion of this proceeding, even though those representations are false. Such a result would frustrate the intent and purpose of 39 U.S.C. 3005, particularly as it was amended on November 30, 1983, to include cease and desist authority. See P.L. 98-186, 97 Stat. 1315. Accordingly, it is concluded that it was proper for the Administrative Law Judge to consider all of Respondent's promotional materials and make findings thereon.

Conclusion

For the reasons stated herein it is concluded that Respondent is engaged in a scheme to obtain money through the mail by means of materially false representations in violation of 39 U.S.C. 3005. Accordingly, the orders authorized by 3005 are issued herewith.