In the Matter of the Petition by

FLORISTS' TRANSWORLD DELIVERY ASSOCIATION
900 West Lafayette,
Detroit, Michigan 48226

Proposed Revocation of Second-Class Mail Privileges for "FTD NEWS"

P.S. Docket No. 1/167

David J. Knight Administrative law Judge

APPEARANCES:
Norman Diamond and
Michael N. Sohn, Esqs.,
Arnold & Porter, Washington, D.C., for the Petitioner.

Arthur S. Cahn, Esq.,
U.S. Postal Service, Washington, D.C., for the Respondent.

Timothy J. May, Esq.,
Patton, Boggs, Blow, Verrill, Brand & May,
Washington, D.C., for the Intervenor,
Teleflora Delivery Service, Inc.

Robert F. Biolchini, Esq.,
Doerner, Stuart, Saunders, Daniel & Langenkamp,
Tulsa, Oklahoma, for the Intervenor,
Florafax International, Inc.

INITIAL DECISION OF DAVID J. KNIGHT, ADMINISTRATIVE LAW JUDGE

By letter dated June 13, 1972, the Manager of the Mail Classification Division of the U.S. Postal Service (Respondent) advised the Florists' Transworld Delivery Association of Detroit, Michigan (FTDA or Petitioner) that the second-class mailing privileges held by its monthly publication, FTD News , would be annulled. Two reasons for this proposed action were set forth in the letter:

(1) FTD News is not a periodical publication within the meaning of 39 U.S.C. § 4351^1/ which reads:

Definition Second class mail embraces newspapers and other periodical publications when entered and mailed in accordance with sections 4352-4357 of this title.

And (2) FTD News is designed primarily for advertising purposes and, under 39 U.S.C. § 4354(c), such publications may not qualify for second-class privileges. That section reads:

(c) A periodical publication designed primarily for advertising purposes . . . is not entitled to be admitted as second class mail ... Respondent cites § 132.226(b) of the Postal Service Manual to identify the nature of the publication's specific disqualifying feature as an advertising publication as one

(b) ... owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of the main business or calling of those who own or control them. [39 C.F.R. § 132.2(6)(ii)!

The petition contesting this proposed annulment was appropriately filed on September 5, 1972. Petitioner states that its publication is a periodical as that is described in 39 U.S.C. § 4351, above, and that it meets all the requirements of § 4354 for entry into the second-class, namely: It is

(1) regularly issued twelve times a year, numbered consecutively and bearing a date of issue;

(2) from a known office of publication;

(3) on printed sheets;

(4) originated and published for the dissemination of information devoted to a special industry;

(5) has a legitimate list of subscribers;

(6) not designed primarily for advertising or for free or at nominal rate circulation.

The Petitioner states that FTD News has enjoyed second-class status since September 1920; that the proposed annulment is contrary to the requirements of the statute; that other publications of similar format are admitted to the second-class; that the annulment would constitute a rule making power not in accordance with the Administrative Procedure Act and is unauthorized; is unconstitu- tional as denying equal protection and due process of law; is arbi- trary and capricious; and would result in an undue and unreasonable discrimination, preferance and prejudice among users of the mails.

The Postal Service's answer to the petition was filed on September 13, 1972. Essentially, Respondent repeats the contents of the letter of annulment that FTD News is not a periodical publication but simply and primarily an index or listing of members of the Petitioner and, therefore, it is not a periodical as that term is described in § 4351 or is used in § 4354; and that the publication is designed primarily for advertising purposes contravening § 4354(c), item (6) of the petition. Otherwise, the answer admits that FTD News meets the requirements of § 4354(a)(1) through (5), as those are enumerated in the petition, but denies that revoking the second-class privilege violates any statute or the constitution or would be discriminatory or preferential.

A prehearing conference was held on October 3, 1972, attended by counsel for both parties, and it was agreed that two issues would be tried. These are:

(1) Whether FTD News is a "periodical publication" within the definition of 39 U.S.C. § 4351; and

(2) Whether FTD News is an auxiliary to and essentially for the advancement of the main business or calling of the Petitioner which owns and controls it.

Hearing was held on October 6, 10 and November 1, 1972. Proposed findings of fact and conclusions of law, briefs and reply briefs were filed by April 17, 1973. By order dated January 11, 1973, Teleflora Delivery Service, Inc., ^2/ and Florafax International, Inc.,2/ were permitted to intervene for the limited purpose of filing briefs on the first stated issue of whether FTD News is a periodical encompassed within the postal statute on the basis that the publications issued by these companies are, for the purpose of this issue, the same as FTD News . Their briefs and reply briefs were also filed by April 17, 1973. These companies and the Postal Service have agreed to be bound by the decision settling the stated issue (see footnote 2, above). Except for these briefs, these companies were not otherwise involved and took no part in the hearing, their petitions contesting the proposed revocations being filed some five days after the hearing in this case was closed.

Three months after the hearing was adjourned, Respondent, on February 6, 1973, notified Petitioner of still another ground for revoking the second-class status of FTD News . Under the Rules of Practice, 39 C.F.R. § 954.8(e), it was too late to consider this as an amendment to the original notice. The petition contesting this latest notice was separately docketed (P.S. Docket No. 2/32) and any further action awaits the conclusion of this proceeding.

The Evidence :

Petitioner and Respondent stipulated (Joint Exhibit 1) that FTD News gained entry into the second-class in September 1920; that reentry ^3/ occurred in 1940, 1946, 1958, 1959, 1964 and 1966; that from September 1920 to the institution of this proceeding, no revo- cation or challenge to the publication's second-class mail status was ever made by Respondent; and that this proceeding is not based on any change in the nature or contents of FTD News since its initial entry.

The Manager of the Mail Classification Division of the Postal Service, Mr. Darwin Sharp, was called as the Respondent's only witness. He has held this position since November 1970. It is within his province to deny initial applications for second-class entry [39 C.F.R. § 132.3(f)! or to propose revocation for existing entries [39 C.F.R. § 132.8 and 39 U.S.C. § 4352(b)!, the latter being the course followed here.^4/

He has a general knowledge of the some 33,000 publications currently admitted into the second-class (Tr. 13). Specifically, knowledge that a publication is improperly within this classifica- tion comes about in several ways. An internal review of the publisher's annual statement may reveal a disqualifying factor. Readers send letters to the Postal Service questioning the admission of publications. And technical failures, which can often be corrected, are found in the annual audit by Postal Service Inspectors. Postmasters throughout the country will also report questionable entries and these will be reviewed with the publishers. They, in turn, point out similar publications enjoying second-class entry without threat of revocation. Those will then be studied (Tr. 13-14). If the disqualifying factor is not considered as correctable, the revocation proceeding, as in this case, will be commenced (Tr. 16-18); but each publication requires rather intensive study especially on the "periodical" issue. In this case, the Witness believes that a publication similar to the one at issue here was questioned as second-class matter. A review of that publication brought the status of FTD News and another into doubt sometime in the spring of 1972. A review of all of these similar publications was conducted and it was determined that the entry was improper (Tr. 23-24). The revocation proceeding was then commenced with the letter of June 13. Before and after that date, the matter was discussed with the publisher or its counsel (Tr. 24-25).

Through the Manager, the May 1972 edition of FTD News , Vol. 104, No. 4, was brought into evidence (Exhibit R-2). The publication is large, measuring 8 1/4" x 11" with 626 pages. It is divided into three sections, the first on white paper and the remaining on yellow sheets. The first, covering 82 pages, is devoted to advertising by florists throughout the country and 10 articles on the activities of Petitioner or regions within the FTDA or on floral design and packaging plus a calendar of events, the President's page, and three short articles of news of FTDA. Within this section, 61 percent of the pages are devoted clearly to the advertising of individual florists and the remaining 39 percent may be considered articles although some, like the "FTD Catalog of Services" and the "Advertisers' Index," may be considered as advertising (Tr. 229). This section comprises 13.2 percent of the complete publication.

The second section of FDT News , pages M-1 as, "Your complete, up-to-date guide to addresses, telephone numbers, and codification of all FTD Members in the United States" and other parts of the world. There is no additional cost for a listing of a member except if he wishes to be shown as also serving a community near its own city listing. These so-called "also served" listings cost $1.10 per month. The listing is first by states with the cities served all in alphabetical order. The codification according to this Witness is an identification code for the extension of credit enabling the transaction of business (Tr. 34). Part of the basis for this information is a letter from a counsel of Petitioner to the Witness (Exhibit R-3) explaining how a florist in Maine would send an order to a florist in Alabama, both being FTDA members, using the membership list and how payment would be made through FTDA's clearing house. This section of FTD News comprises 58.7 percent of the complete publication.

The last section of FTD News is entitled the "FTD Card Advertising" running from page C-1 to C-176. These are member paid ads supplementing the membership list (Section II) giving additional information such as locations relative to hospitals, hotels, hours of operation, etc. This listing is in the same alphabetical format as the membership list. This section comprises 28.1 percent of the complete publication.

According to this Witness, FTD News does not meet the standards as a periodical established under the statute as defined by court ^5/ and administrative decisions, among other sources (Tr. 38). It fails because of four elements:

(1) It is merely a list of florists or a directory who are members of the FTDA conveying no information except that necessary for the transaction of business between themselves (Tr. 39).

(2) There is no continuity between issues and, once one appears, a prior one may be discarded (Tr. 41-42).

(3) To a very large measure, the membership list within FTD News repeats the material of the previous edition and each issue is complete (Tr. 41), and

(4) There is no significant editorial manipulation, function, or judgment necessary in compiling and publishing an edition of FTD News (Tr. 75-84). With this description, the publication taking into account its size, would properly fall within the fourth-class mail category (Tr. 40 and 253-254).

A periodical, as ordinarily understood, is a publication appearing at stated intervals, each number of which contains a variety of original articles by different authors, devoted either to general literature or some special branch of learning or to a special class of subjects. Ordinarily each number is incomplete in itself, and indicates a relation with prior or subsequent numbers of the same series.

On the second issue, FTD News , states the Witness, is designed primarily for advertising purposes since the main business of FTDA is to sell flowers and FTD News is an auxiliary to that main business (Tr. 41).

Two other publications similar to FTD News have also been notified of revocation proposals (see footnote 2, above) but the Witness did not know how many other publications having second- class mail status -- among some 33,000 publications -- are also likely situated. Revocation proceedings against these would be commenced upon their discovery (Tr. 48).

The cross-examination of this Witness consumed the largest segment of the hearing. Twelve publications made up mainly or solely of indices or listings were introduced into evidence and seven others, similar to these, I rejected as cumulative. All of these publications enjoy second-class statutes and they were introduced to show a similarity and, therefore, discrimination against FTD News . These publications convey information but the Witness insists that the compiling of these indices or listings is done for a purpose dissimilar to that of FTD News .

The Witness explained editorial or manipulation as the manipulation of raw data (Tr. 77). The Abridged Reader's Guide (Exhibit P-1) takes the title, U.S. News & World Report and reduces it to U.S. News . This is an example of editorial function. ^6/

A listing format in a publication does not -- in and of itself -- disqualify the publication for second-class entry (Tr. 94). And while the general character of the information conveyed by the index in business publication rates and data (Exhibit P-2) is similar in kind to that contained in FTD News (prices, services offered, etc.), in actual fact, they might be completely different when the purposes or use of the information provided is considered (Tr. 93-96). And a publication which contains a membership list, among other things, would not necessarily be denied second-class entry (Tr. 100).

Although a publication is primarily and mainly listings, it can convey as much information as the ordinary article appearing in standard narrative style (Exhibit P-3, Security Owner's Stock Guide ) (Tr. 105). Conversely, the existence of a standardly written article within a publication does not necessarily constitute it as a periodical (Tr. 64-65). This exhibit together with two others (Exhibits P-4 and 5), were used to show examples of publications with second-class entry which repeat a great deal of information from one issue to the next. This repetition is not fatal if necessary for continuity and total information (Tr. 113). And each publication must be examined to determine if the nature of the repetition would disqualify it, there being no specific percentage of repetition established, but it depends on the particular publication (Tr. 219-220).

Other indices and listings, covering diverse topics came into evidence to show their admission into the second-class.^7/ These publications, almost exclusively in listing formats, convey information (Tr. 135) and the Witness, based on the information contained in the transportation guide (Exhibit P-14), stated that it is entitled to second-class entry (Tr. 134-136) even though giving information which may have been supplied to the publisher by the transportation company and the listing paid for by them^8/ (statement of counsel, Tr. 128-129, 175 and 181).

But other factors may close the door to the publication's second-class entry. If an issue of a publication is cumulative of prior issues, the last edition may not be entered while the issues prior to the cumulative edition could be (Exhibits P-16, 16A and 16B, 17 and 18, Tr. 148-149, 151-162). Therefore, a publication like Cumulative Book Index (Exhibit P-17) would not be entitled to second-class entry (Tr. 148-149 and 162). The Witness, in another case, pending at the time of this hearing, testified that these exhibits, Index to Legal Periodicals (Exhibit P-16), Cumulative Book Index (Exhibit P-17), Education Index (Exhibit P-18) and Reader's Guide (Exhibit P-1) were entitled to second-class entry. See, American Chemical Society , P.O.D. Docket No. 3/90, transcript pages 66 and 70-72. But there the discussion was to the editorial functions involved in creating those publications and not whether the cumulativeness was fatal. I do not, therefore, consider the prior testimony as contradictory. These four publications were Houghton v. Payne , 194 U.S. 88, 96-97. These listings, although paid for by the carrier, are not considered as advertising, 39 U.S.C. § 4352(c). These guides must be considered as unique in the field of periodicals. See National Publishing Company, Inc. , P.O.D. 3/5 (1969) and the discussion below. criticized in R. R. Bowker Company , P.O.D. Docket No. 2/97, (1963) as being comparable to the publication in issue in that case and which lost its favored classification there. Revocation notices were sent to the publisher of these four but there is no record -- according to an oral stipulation between the parties -- of what subsequently occurred;^9/ but those publications are still classified in the second-class (Tr. 215 and the stipulation, Tr. 261-263), and no proceedings have been undertaken since then to cancel their present status (Tr. 143) as of the time of the stipulation.

The cross-examination was then directed at the second ground for the proposed revocation, namely, that the publication is auxiliary to the main purpose of the Petitioner. It is the Witness's understanding that a florist, upon receipt of an order for flowers to a distant city, would consult the FTD News for a florist in that city capable of filling the order. That book would also give an identification number by which both florists could check each other. The sending florist remits the payment for the flowers to a central point to which the receiving florist (who delivers the flowers) sends his bill. The whole transaction is between the two

Referring to the first section of FTD News , the only segment that contains in part narrative style reports, the Witness testified that some of these would not necessarily promote the interests of FTDA. For example, an article entitled, "'Stamps' Deliver Hospital Flowers" (Exhibit R-2, page 36) would be a news report as would "Season's Greeter Candles Found Along East Coast" (Exhibit R-2, page 40). But "FTD Catalog of Services Features Permanent Binder" (Exhibit R-2, page 38) is a promotional article (Tr. 229).

A thorough analysis of any questionable report must be made to determine if it is news or designed to promote the publisher's interest directly (Tr. 232 and 234-235). One test was revealed in the following colloquy dealing with a report found in the Tidewater Motorist (Exhibit P-20) entitled, "New Directors Named to Board."

The Witness testified that this is not a promotional article:

Q. (By Mr. Sohn) Why is that not promotional?

A. What does it promote?

Q. I see (Tr. 234)

This exhibit together with AAA Newsletter published by Southern West Virginia Auto Club (Exhibit P-21) and AAA Newsletter , Massachusetts Division (Exhibit P-22) are said to be typical of publications issued throughout the country by membership organizations of the Automobile Association of America (AAA). All of these enjoy the second-class privilege and several advertise either directly or through news articles the products and services available only to AAA members (Tr. 237-238, 240). No action has been taken to revoke that privilege on any of these publications (Tr. 253).

Turning to Petitioner's case-in-chief, FTDA, according to a letter by Petitioner's counsel (Exhibit P-29), is a non-profit, non-stock corporation governed by the Michigan General Corporation Act, Michigan Statutes Annotated § 21.1 and 21.118, and an active member, who must be a retail florist in good standing, is synonymous with stockholder, M.S.A. § 21.2. Admission, expulsion and qualifica- tion of members are governed by the Corporation's By Laws, M.S.A. § 21.118 and the By Laws, Exhibit P-25. The governing statute permits the formation of local units, M.S.A. § 21.129, and FTDA has created 14 regions, a representative from each comprising the Board of Directors, and 92 districts (Tr. 371). The Board, the President, Vice-President and Treasurer, appointed by the Board must be members of FTDA. The Secretary and other officers or assistants need not be members (Exhibit P-25), and compare Article IX of Articles of Association, By Law IX and Tr. 349). Active members have the right to vote on all questions to the exclusion of all other classes of membership (Exhibit P-25), Article X, Articles of Association) and the, in their capacity as stockholders, own all the property and fixtures of FTDA (Tr. 328 and 340). Four pools have been established within the Association: the clearing house, the marketing division, special services division, and publications and surpluses of funds (as described below) are distributed back to the members. Income not returned is taxable (Exhibit P-29).

Three witnesses, the Executive Vice-President and Secretary of FTDA, a florist operating in Baltimore, Md., and FTDA's Director of the Publications Division, explained in depth the operations of that Association. It has 13,000 members, 12,500 within the United States or almost 50 percent of all the retail florists in this country. Each member shop grosses between $68,000 and $80,000 in annual sales, of which, as much as 20 percent is derived from FTD wire orders and the great majority of these are sole proprietorships (Tr. 267-269 and 354). Totally in 1972, these florists among themselves placed 13.5 million orders amounting to $153 million and of this amount only $30,000 was written off as bad debt (Tr. 278-279).

Any florist may apply for membership into FTDA. He pays a non-refundable $150 which is used to defray the cost of inspection of his shop. The inspection will be done by a district representative who is a member of FTDA (Tr. 276). If, and only if, he meets the rather rigid requirements concerning personnel, display windows and refrigerators, telephone, equipment and stock (Tr. 271 and General Requirements for Membership, Exhibit P-23), he is admitted. He then pays a one-time $100 as a membership fee, $25 to $50 annual dues depending on his business volume, $5 tp $15 to $50 annual dues depending on his business volume, $5 to $15 dues to his local district, $10 subscription for FTD News , and a one-time $100 credit deposit or less depending on the size of his home city used to cover his bad debts (Tr. 269-270 and 278) and receives his code number shown in the membership list (Tr. 277). A member's shop is inspected at least once every 18 months with a report filed at FTDA headquarters in Detroit; and test orders are placed by professional shoppers to insure the delivery of the full value of the order (Tr. 279). The method of FTD shop's operation is detailed and in writing (Exhibits P-24 and P-25).

If a member fails to live up to the requirements, the membership committee may impose a suspension of membership, fine, probationary period or cancel the membership (Tr. 287). This is necessary to maintain the high standards of the Association (Tr. 287). In 1971, 165 disciplinary actions were taken (Tr. 288).

Upon receipt of an order from a customer for delivery in a distant city, the sending florist will consult the membership list to determine if there is an FTD member located there. The list will tell him the location, telephone number, hours of operation, and whether that florist stocks the type of flowers or gift sought by the customer (Tr. 294-295 and 378). The order is then put through, usually by phone, and that florist, first checking the membership list to verify the status of the sending florist, will then fill and deliver the customer's order.

The sending florist (who receives the customer's order) remits the cost to FTDA's clearing house and the receiving florist (who delivers the order) bills FTDA's clearing house monthly (Tr. 299). Part of the proceeds from each order (a total of 6 percent: 2.5 from the sending florist and 3.5 from the one receiving the order) is devoted to the operations of the marketing division (which generally advertises the services offered by FTDA to the public) and the clearing house. Surpluses in these accounts are paid back to the members (Tr. 300-301). This return amounted to $350,000 in 1972 (Tr. 316). FTD News is sent out monthly to insure the availability of current information to members: new or restored members are added and those no longer in the Association of suspended are dropped; changes in names, ownership, location or telephone numbers are noted; new codes indicating the goods or services offered are added and the prices therefor are shown and, at present, there are 11 such codes; and, if a member changes his price for a particular service or adds or deletes a particular code, this, too, is given (Tr. 297 and 378-379). The Association's publication division has eight employees devoting about 150 manhours a week in posting this changing flow of data and in keeping FTD News current (Tr. 381). There are approximately 1500 changes in the membership list comprised of 13,000 members and the changes have been increasing steadily from month to month (Tr. 403 and 414).

The names of the member florists within ay city are rotated each month so that the one at the tope of the list will be changed in the next issue. This is to equalize the distribution of orders for there is a tendency by the sending florist to use the top name on the list (Tr. 331-332). The public does not see the FTD News (Tr. 299) nor would it have any reason to do so.

The FTD News is the basic keystone of FTDA. Without it, there can be no transactions between florists (Tr. 302, 332, 355, 415-416). The purpose of FTDA is to facilitate the completion of these transactions but FTDA does not itself sell flowers (Tr. 303). The purpose of the formation of FTDA is set forth in Article III of its Article of Association (Exhibit P-25) as follows:

... To promote good feeling and honest dealing with other Members and the public; to promote ... the exchange ... of ideas, principles, policies, and methods of conducting business; to promote the mutual exchange of business between Members ... (Emphasis mine)

The FTD News furthers these purposes (Tr. 334), but it is the membership list which is crucial to the overall operation and the rest of the publication is not at all necessary to this end (Tr. 415-416) although it does contain some news about the florist industry (Tr. 356-357).

Findings of Fact and Conclusions :

Concerning the first question of whether FTD News is a periodical publication embraced by the statute, I find the following facts:

1) The purpose of retail florists associating themselves together into FTDA is to make possible and facilitate the delivery of flowers and gifts from one locale to another resulting in an increase in their business. .

2) The only subscribers to FTD News , published by FTDA, are retail florists who are members of FTDA. .

3) The essential purpose of FTD News is to bring to these subscribers a current membership list containing sufficient information to permit a florist in one locale to wire or phone a local customer's order to a distant locale there to be filled and delivered and the remainder of this publication is incidental to this essential purpose. .

4) The membership list within FTD News is 58.7 percent of the whole; together with the card advertising section, it is 86.8 percent of the publication; and, exclusively of the articles within the first section, 94.7 percent of FTD News gives notice to subscribers of which florist will provide what service, where and for how much. .

5) The membership list itself is kept current with approximately 1500 changes in the list occurring monthly among the 13,000 members, or about a 12 percent change, and these changes, which increase each month, must be noted in the list to insure a smooth and continuing operation by the subscribers. .

6) While these changes in the membership list are necessary to keep it current, there is no necessity -- as that is dictated by the use to which the list is put -- to refer to any prior issue once the current month's edition is delivered, each number having to be complete unto itself. .

7) There does not appear to be any significant difference, based on this record, between the FTD News , and business publication rates and data (Exhibit P-2), although the latter is not published by a membership organization, and that the continued entry of the latter publication in the second-class appears to be improper.^10/ So, too, with any of the financial publications (Exhibits P-3, P-4).

8) Other publications which may be considered as improperly within the second-class have been advised of the institution of proceedings to revoke that privilege, namely, the various guides to periodicals (Exhibits P-1, P-16, 16A and 16B, P-17 and P-18 and see footnote 9, above); a travel planner (Exhibit P-15, footnote 7); and Shepard's Citations (Exhibit P-19, footnote 6). Further, the used car guide (Exhibit P-13, footnote 7) which, again, may be similar as a listing to FTD News is under investigation. Because these publications may lose their favored status, and are currently being tested, there is no discrimination in the present action taken against FTD News . The publications detailing transportation schedules are unique and are not to be compared (see footnote 8, above). .

9) Despite the apparently improper admission of publications within the second-class, no prejudice results to FTD News since the record shows that two other publications concerning flowers by wire on the national scene are also undergoing proceedings to revoke their second-class status, i.e., Teleflora Delivery Service, Inc., P.S. Docket No. 1/206, and Florafax International, Inc., P.S. Docket No. 1/207, and, therefore, these latter companies are receiving no undue preferance.

Based on these findings, that each number is complete by itself and, therefore, there is no continuity between issues, I conclude that FTD News is not a periodical publication as that is envisioned by the statute in its definition, 39 U.S.C. § 4351, or in its specification of the conditions under which a periodical may attain the second-class, 39 U.S.C. § 4354. The latter section prescribes certain requisites of a periodical, "... but does not declare that they shall be the only requisites." Houghton v. Payne , 194 U.S. 88 at 96 (1904) and see footnote 5, above. Intrinsic in the statutory periodical is that,

... each number is incomplete in itself, and indicates a relation with prior or subsequent numbers of the same series. It [a periodical! implies a continuity of literary character, a connection between the different numbers of the series in the nature of the articles appearing in them, whether they be successive chapters of the same story or novel or essays upon subjects pertaining to general literature. Houghton v. Payne , above, at 97.

Eight years later, in 1912, this approach was again taken in Smith v. Hitchcock , 226 U.S. 53 at 58-59, and it was deemed as established that not every paper printed serially or periodically is a "periodical" within the meaning of the statute (the predecessor to sections 4351 and 4354). These papers may not, among other requirements, be complete in themselves which precludes continuity as that is required of a periodical.

In distinguishing the complete book at issue in that case from a periodical, the court noted at page 59-60 that a publication issued periodically would fall into the second-class if its "object is information and the subject matter is a changing one." Impliedly then, newspapers or magazines dealing with current or passing events are not complete with each issue for it is necessary either to know what has gone to understand what is happening now or to keep abreast of those changing events for their own sake.

But the fact of this case is that no reference to any prior issue of FTD News is at all necessary once a subscriber has the current issue. The intended and dominant use of this publication requires that each number be complete so that any member florist will quickly and completely have all of the information he needs to transmit his customer's order to a distant city. Last month's issue is of no interest to any member and, since the member must use and rely on the data in the current issue, any change is meaningless to him so that, as far as he is concerned, next month's issue could contain exactly the same list as in the present issue. The percentage of change affects only about 12 percent of the total, including new members in cities never before listed. And, while these changes are necessary to keep the list current, there is no evidence that they, to any extent, are noted by the reader in relationship to the information that was changed from month to month.

This completeness and ensuing lack of continuity may be shown in another way. The listing under any given city having two or more member florists is rotated each month to equalize the distribution of transactions among the member florists in that city. Thus, since the first name in that city is to be chosen, or the first one supplying the requested stock or service, it doesn'matter to the sending florist who the receiving florist is and the changes month to month, therefore, are meaningless to the reader with reference to what last month's listing may have been. Hence, if the changes in information are not taken into account by the reader as changes from the prior number, it cannot be held that the membership list is a publication whose "object is information and the subject matter is a changing one" as that was intended in Smith v. Hitchcock , above.

Paraphrasing Witness Sharp, these changes are necessary to keep a list current for business purposes but not for the purpose of publishing information as that continually flows with changes recorded meaningfully affecting prior data and having some impact on the reader. FTD News (1) has no continuity, (2) each number being complete in itself and it, therefore, lacks two necessary elements of a statutory periodical.

Concerning these two elements of a periodical, Petitioner and intervenors insist that, for all intents and purposes, the transport- ation guides (see footnote 8, above) showing the schedules of the various modes of travel are exactly the same as the membership list in that these guides are complete with no continuity between issues. This appears to be true but those guides have historically been accepted as periodicals [except for the dissent in Payne v. Railway Publishing Co. , 20 App. D.C. 581 (1903) and the comment in the Initial Decision in Zulch and Zulch , P.O.D. Docket No. 3/46, November 2, 1970!. They have also been attacked the status of these as non-statutory periodicals because of their listing-type format but does if they fail to meet the stated conditions for entry enumerated in 39 U.S.C. § 4354, see National Publishing Co., Inc. , above are footnote 8. These guides must be viewed as unique. They cannot, therefore, be used as a basis for comparison. And other likely constituted publications have lost their second-class status, One-Spot Publishers, Inc. , P.O.D. Docket No. 1/231 (1960), while the guides continue to enjoy the cheaper mail transportation. The Examiner who wrote that decision noted the singularless of a transportation guide stating, "... I cannot regard the . . . guide . . . as a significant precedent on the question of what constitutes a periodical as distinguished from a book." (Initial Decision, page 21, no appeal was taken). But this same Examiner attacked the management of the mail classification section in Zulch and Zulch , above, on cumulative publications including transportation guides.

The existence of the few articles appearing in the first section of FTD News cannot qualify it as a periodical. The purpose of FTD News is to bring to the members the membership list. Without that, the Association would fail. The articles -- comprising only about

5.3 percent of the publication or, giving Petitioner every benefit of what might be an article and not promotional, about 32 pages out of a total of 626 pages -- must be viewee as only incidental to the main purpose of publication, and by themselves have no affect on the status of FTD News as a periodical. Compare Houghton v. Payne , above, at 98 where the issuance of the books periodically was "too palpable to require comment or explanation." Also the articles in Paperback Books in Print were found to be an unimportant section of that publication and included apparently for the primary purpose of qualifying the publication as a periodical which the failed to do. R. R. Bowker Company , P.O.D. Docket No. 2/97, Departmental Decision, January 31, 1964, page 4, and Initial Decision, pages 24-25.

Finally on this issue, the existence of other likely constructed publications within the second-class does not necessarily amount to a discriminatory practice under which FTD News suffers while the others revel. The search, examination and re-examination of the entries is an ongoing program within and without the Postal Service. Questionable entrants are reviewed and discussed with the publisher. If the deformities cannot be corrected, the revocation process is begun as occurred in this case. But it is a question of searching these others out and their possessing a second-class license does not mean that it's theirs in perpetuity. Estoppel is not an operative theory against the Postal Service regardless of how long the entry has existed, Houghton v. Payne , above, at 98-99. Eventually, the question of improper admission will have to be answered. To be sure, this is not a satisfactory policing action 11^/ and leaves much to be desired. But it does not amount to any type of Postal Service regulation applied to some and not others. Such a regulation is positively prohibited, see 39 U.S.C. § 403(c), Postal Reorganization Act.

Thus, the situation here differs from that relied on by Petitioner in Marco Sales Company v. F.T.C. , 453 F.2d 1 (1971). The Second Circuit Court of Appeals held at page 6 that:

The arbitrary character of the Commission's [Federal Trade! action consists of its total failure to even advert to, much less explain, its reason for the rigid ad hoc adjudicatory stance it adopted toward the petitioner and the flexible tolerance its industry regulation displayed to those utilizing the same or similar devices.

The Postal Service is applying the standard enunciated by the Supreme Court defining ^12/ "periodical" to all publications and there is no evidence of favored treatment to one. But the problem is in finding those among the 33,000 entries that do not belong there. It is not an instance of differing standards irrationally applied. The sum total of Petitioner's cross-examination of Witness Sharp does not bring me to an opposite conclusion.

Lastly on this point, the cure of discrimination is the removal of those publications not qualifying for second-class entry under the established judicial and statutory standards, Dell Publishing Co. v. Summerfield , 198 F. Supp. 843 (1961), affirmed 303 F.2d 766 (1962). The decision there -- relying on the definition of a "periodical" in Houghton v. Payne and Smith v. Hitchcock , above, and holding that the revocation of the second-class entry belonging to crossword puzzle pamphlets was not an arbitrary and capricious action or an abuse of discretion having no rational basis -- clearly

Houghton v. Payne , 194 U.S. at 97 says: "a periodical, as ordinarily understood ...," and Smith v. Hitchcock , 226 U.S. at 59 states: "The noun periodical, according to a nice shade of meaning given to it by popular speech ..." The statutory "definition" (39 U.S.C. § 4351) is no definition at all except for the ordinary newspaper and, perhaps, magazines. These put one in mind of Mr. Justice Stewart's "definition" of obscenity in Jacobellis v. Ohio , 378 U.S. 184 at 197, to wit: He knows it when he sees it. indicates that no formal rulemaking proceeding is required^13/ to enunciate the standards under which a publication qualifies as a periodical embraced within the statute or that this proceeding creates or imposes a previously unannounced requirement.

Turning to the second issue of whether FTD News is published as an auxiliary to and essentially for the advancement of the main business of those owning or controlling it, 39 C.F.R. § 132.2(6)(ii), I find the facts determinative of this issue as follows:

1) FTDA, the publisher of FTD News , is owned and controlled by its members (stockholders) who must be retail florists. Its Board of Directors and the policy-formulating Officers must also be members and retail florists. .

2) The purpose of FTDA's existence is the operation of a system through which the members can transmit customer's orders for flowers and related items throughout an intercity and international network populated by the members. .

3) The flower-buying public does not see FTD News but benefits by its use by members of FTDA.

Based on these facts, I conclude that FTD News is published as an auxiliary to or for the advancement of the main purpose of those controlling the publisher. That purpose is other than publication of FTD News.

Petitioner's argument is that the publication of the membership list is more than "auxiliary to or for the advancement" of its main business. It is neither of those. Rather, it is the essential business of FTDA in and of itself. Taking FTDA as an entity apart from its members (stockholders), Petitioner contends that FTDA publishes current information devoted to a special industry, the latter contention being admitted by Respondent,^14/ and is therefore exempt from the exclusion of the regulation.

But in view of the purpose of the advertising exclusion of section 4354(c) and the natural flow from that to the regulation, I find Petitioner's view to be too restrictive. The regulation, 39 C.F.R. § 132.2(6)(ii), reads:

(6) Advertising publications . Publications designed primarily for advertising purposes may not qualify for second-class privileges. They include:

(ii) Those owned or controlled by individuals or business concerns and conducted as an auxiliary to and essentially for the advancement of the main business or calling of those who own or control them.

This regulation is intended to exclude from the second-class those publications issued for some purpose other than the dissemination of the information in the publications. It is a regulation promulgated under the auspices of 39 U.S.C. § 4354(c):

A periodical publication designed primarily for advertising purposes ... is not entitled to be admitted as second class mail ...

Those who control the publisher, FTDA, have as their business or calling the intercity sale of flowers. But under the statute and regulation, that main business must be the publication of a periodical for its own sake to qualify for the entry into the second-class. The regulation precludes by its terms those who own (i.e., sole proprietorship or a partnership) or control (stockholders) a publishing company (FTDA) and forbids the entry to those publications advancing, advertising or promoting the main purpose f those who own or control, cf., Sunshine Publishing Company v. Summerfield , 184 F. Supp. 767, 773 (1960), if that purpose is other than the publication itself. Those in control here do not have as their main interest the publication of information for its own sake. That information is designed to directly advance and make possible the primary enterprise of exchanging orders for flowers by wire. To this extent, the publication is devoted to a special industry.

Since the information in the publication has no other use but to promote and continue the business of the members, it is analogous to a Sears Roebuck catalog which, under the Petitioner's reasoning, could be said to be devoted to the special industry of merchandising. But in Zulch and Zulch , above, such a catalog, there of eyeglass frames, was not found to be advertising or promotional because the publisher there offered nothing but the publication for sale; had no interest in the products offered for sale; was not an agent, distributor or affiliated with any manufacturer; and was not paid anything in any way by any company whose products appeared in the catalog.^15/ Here, on the contrary, the members of FTDA have an everyday, direct and vital interest in the membership list.

I conclude, then, as to the ultimate and dispositive issues in this proceeding that

(1) FTD News is not a periodical publication within the meaning of 39 U.S.C. § 4351; and

(2) FTD News is designed primarily for advertising purposes in that it is auxiliary to and essentially for the advancement of the main business or calling of those who own and control it in contra- vention of 39 C.F.R. § 132.2(6)(ii).

In reaching these conclusions, I have considered the parties' extensive briefs and replies, and the proposed findings of fact and conclusions of law including those of the intervenors and, to the extent embodied herein, their proposed findings and conclusions are adopted. Otherwise, I must reject them as not supported in fact or

I recommend that the letter of the Manager, Mail Classification Division, Finance Department, dated June 13, 1972, proposing to revoke the second-class mail privileges of FTD News be affirmed.

_______________________

1/ These provisions remain in effect after the 1968 reorganization of the Post Office Department into the U.S. Postal Service by section 3 of the Postal Reorganization Act, P.L. 91-375. FTD News is said to be owned and controlled by FTDA and is operated essentially for the advancement of the main business of that Association.

2/ The Postal Service also seeks to revoke the second-class privileges held by these companies' publications in P.S. Docket Nos. 1/206 and 1/207, respectively. Because of the time lapses occurring between filing dates of all of these cases, it was impractical to consolidate the proceedings for hearing.

3/ Reentry usually occurs because of technical changes such as in title, place of publication, frequency of publication, etc.

4/ Because of this function, the witness was permitted, over Petitioner's objection to state his opinion on the ultimate issues in this case. [Transcript (hereafter Tr.) 32 and 37!

5/ Both parties and the intervenors rely on the definition of a "periodical" found in Houghton v. Payne , 194 U.S. 88 at 94

6/ Shepard's Federal Citations (July 1972), )Exhibit P-19), introduced to show a process "that involves far more judgment" than compressing U.S. News & World Report was considered as insignificant editorial manipulation in P.S. Docket No. 1/88. Since that proceeding to revoke Shepard's second-class entry is pending, I don't consider the Witness's characterization as final or evidence of the Postal Service's ultimate determination (Tr. 189) or standard. It is done to compress the title of that magazine, for the formating of the material, for use in that publication (Tr. 83). But, as to FTD News , a member's name is added or deleted from the membership list as that appears in FTD News as a form of list maintenance (Tr. 77, 173). This is not an editorial function; it is a computer function done for the purpose of billing and maintaining the list and the only function of the publication is one of printing the list (Tr. 78). It is merely data manipulation and this data has already been manipulated for another purpose, presumably, membership in the Association. This is business judgment and not editorial function (Tr. 80-81, 174-184). This manipulation is not done for the purpose of publication but for some other reason (Tr. 84 and 184). As to the listing in FTD News, he testified, ... It is not a list which intends to be compre- hensive in terms of any editorial selectivity from the publisher, it is rather a list which purports to be comprehensive in terms of the membership who are in good standing, who have agreed to share the credit risk involved in the transmission of flowers. (Tr. 180)

7/ Exhibit P-13, NADA Official Used Car Guide , is under investigation commenced in August 1972 as a possible subject for revocation (Tr. 126). So, too, is Exhibit P-15, Travel Planner , which is the subject of a revocation proceeding in P.S. Docket No. 2/78. Exhibit P-14, The Official Guide of the Railways, is a listing that is also typical of bus, air and boat publications showing transportation schedules.

8/ The listing format of a transportation guide is not used to disqualify such a publication. Historically, these have been considered as nondescript periodicals when contrasted to magazines.

9/ But see, The H.W. Wilson Company , P.O.D. Docket Nos. 2/123, 2/124, 2/125 and 2/126, Departmental Decision, January 14, 1965. The revocation notices were dismissed without prejudice because of improper notice given to the publisher of the grounds for revocation. On February 12, 1973, notice of revocation was given to which the publisher filed an appeal on April 14, 1973, P.S. Docket No. 2/66. florists by means of FTDA and without the membership list in FTD News , the florists would be hard pressed to carry on (Tr. 224-227). And, as noted above, the Witness testified that the main business of FTDA is to sell flowers to which FTD News is an auxiliary (Tr. 41).

10/ Respondent's counsel holds that an index or listing of the members of an association is immaterial (Tr. 99-100 and 336). His Witness Sharp indicates that mere membership lists for business purposes are disqualifying (Tr. 180-181). In any event, the purposes for each publication are remarkably similar: one on where any concern can place its ad and for how much and the other on where an order for flowers can be filled. and P-5, the Stock and Bond Guides and Dividend Records) if any of the publications are complete in themselves or cumulative of prior issues so that reference to those is no longer necessary (see section 2 of Standard & Poor's Dividend Record , Exhibit P-5). .

11/ In its reply brief, Respondent alludes to a vast program undertaken to correct past errors and inconsistencies in the second- class field (Reply Brief, page 3, item 3) since the Postal Reorgani- zation Act in 1970.

12/ The Judicial definition of a periodical is, at best, vague.

13/ Although codification of the judicially established standards would be of benefit. See the remarks of the Judicial Officer in R. R. Bowker Company , above, at page 3 of the January 31, 1964, decision, indicating that the Congress must sooner or later face the issue of defining guidelines because of the growth of publications issued periodically since 1879.

14/ This devotion of a publication to a special industry is a stated requirement for entry, 39 U.S.C. § 4354(a)(4) but I am at a loss to understand why the Respondent concedes such devotion because of the manner in which the information is compiled and the use to which it is put. But, I do take the "devotion" as admitted. As pointed out by the parties, that language dates back to 1876 and is aimed at preserving to the second class those publications disseminating information of a public character or devoted to literature, science, art or a special industry, 39 U.S.C. § 4354(a)(4), to the exclusion of all else. Clearly, then, the regulation forbidding entry to publications promoting some other interest of the publisher, or those controlling it, other than the publication is within the prohibition of this statute. That such a publication is also excluded from controlled circulation [39 U.S.C. § 4421(5)! aimed at another class of mail does not destroy the support that this regulation, 39 C.F.R. § 132.2(6)9ii), finds in section 4354(c).

15/ But the catalog was not found to be a periodical and, therefore, gained no entry into the second-class. law. This is not to say that I don't recognize the intensity of the arguments or the obviously long hours that went into their composition.