P.S. Docket No. 1/167
May 24, 1974
In the Matter of the Petition by )
)
FLORISTS' TRANSWORLD DELIVERY )
ASSOCIATION )
900 West Lafayette )
Detroit, Michigan 48226 ) P.S. Docket No. 1/167
)
)
Proposed Revocation of Second-Class )
Mail Privileges for "FTD NEWS" )
APPEARANCES: For Petitioner:
Norman Diamond, Esq.
Michael N. Sohn, Esq.
Arnold & Porter
Washington, D.C.
For Respondent:
Arthur S. Cahn, Esq.
U. S. Postal Service
Washington, D.C.
For Intervenor, Teleflora Delivery Service, Inc.
Timothy J. May, Esq.
Patton, Boggs, Blow, Verrill, Brand & May
Washington, D. C.
For Intervenor, Florafax International, Inc.
Robert F. Biolchini, Esq.
Doerner, Stuart, Saunders, Daniel & Langenkamp
Tulsa, Oklahoma
POSTAL SERVICE DECISION
This proceeding arises out of the Manager Mail Classification Division's letter of June 13, 1972, to Florists' Transworld Delivery Association (FTD or FTDA) proposing to revoke its permit for second-class mail privileges for its publication "FTD News". FTDA commenced this proceeding by filing a petition in accordance with 39 C.F.R. 132.8(b) and 954.8(b).
To the allegations of the petition that FTD News meets all required conditions for second class mail privileges the Manager, as Respondent, herein alleged:
"(1) The 'FTD News and Membership List' is not a 'periodical' publication within the meaning of (old) 39 U.S.C. ??4351 and 4354, but is simply and primarily an index or listing of members of the Association.
"(2) The 'FTD News and Membership List is designed primarily for advertising purposes in violation of (old) 39 U.S.C. § 4354(c) (Section 132.226(b), Postal Service Manual. More specifically the 'FTD News and Membership List' is owned and controlled by the Florists' Transworld Delivery Association and conducted as an auxiliary to and essentially for the advancement of the Main business of the Association." 1/
After hearing and briefing the Administrative Law Judge issued an Initial Decision adverse to Petitioner on both issues 2/ from which the publisher appeals.
Petitioner FTDA is a membership corporation composed of retail florists. While FTDA performs a number of other functions, its primary activity is to afford a facility for the sale of flowers-by-wire by its members, i.e., the filling of an order for flowers by a florist in one city that was placed in another. A keystone of this project is the directory section of FTD News, the publication whose second class entry is questioned here. That publication which is issued monthly is composed of a small section of news and like editorial matter, some advertising and a large directory section of FTDA members arranged by location. FTD News is circulated exclusively to FTDA members.
Upon receipt of an order for flowers to be delivered in a distant community, an FTD florist ascertains from the directory section of the most recent issue of FTD News an FTDA member who will provide the service required and who serves the appropriate community. He also determines from the directory the amount to be charged. The florist receiving the order then telephones the order to the other florist who then provides the service. Accounts are cleared through FTDA's clearing house.
Pages 18-23 of the Initial Decision contain a more detailed description of FTDA, its activities and FTD News, as well as the functional relationship between the publication and FTD's flowers-by-wire service. That description is attached to this decision as Appendix A.
The numbered findings in the Initial Decision are set out below together with Petitioner's exceptions in summary form:
A. Findings Pertaining to the
"Periodical" Issue
Finding 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."
No exception.
Finding 2. "The only subscribers to FTD News, published by FTDA, are retail florists who are members of FTDA."
No exception.
Finding 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."
Finding 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, exclusive 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."
Petitioner's exception to Findings 3 and 4--"There is no basis in the record for describing the dissemination of the list portion of FTD News as 'the essential purpose' of publication which contains news articles and other matters of interest to retail florists to an 'incidental' position."
Finding 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."
No exception.
Finding 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."
Petitioner's exception -- "The finding is based on the Manager's opinion that there is no 'continuity' between issues of FTD News because 'a prior one may be discarded' without diminishing the utility of the current issue. FTD News is no more a publication which is 'complete unto itself' than is a transportation guide, Time Magazine or any newspaper. The latter publications -- clearly periodicals -- are 'complete unto themselves' in that one can glean the most current information from them without resorting to prior editions. No less is true of FTD News."
Finding 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. Footnote omitted . So, too, with any of the financial publications (Exhibits P-3, P-4, 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)."
Petitioner's Exception -- "While FTD agrees with the Administrative Law Judge's conclusion that there is no significant difference between FTD News and Exhibits P-2 - 5, we except to his unsupported conclusion that these other well-known publications are not 'periodicals'."
Finding 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, P-16A and 16-B, 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)."
Petitioner's exception -- "The preliminary actions of the Manager which are described in Finding 8 took place subsequent to the close of the hearing and were not relied upon in the briefs of either party."
Finding 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 preference."
Petitioner's exception -- "FTD denies that the prejudice to it can be measured solely by reference to two other publications relating to flowers by wire."
B. Findings Pertaining to the
"Owned or Controlled" Issue
Finding 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."
Finding 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."
Finding 3. "Without the membership list in FTD News the FTDA system would collapse."
Finding 4. "The flower-buying public does not see FTD News but benefits by its use by members of FTDA."
FTD does not except to any of these four findings, but contends they do not support revocation.
Owned or Controlled Issue
I turn first to what has been designated as the second issue, namely, whether FTD News is a publication designed primarily for advertising. That issue is the easier of the two to decide and as my conclusion on that issue is adverse to the publisher, it is dispositive of this proceeding.
Petitioner does not except to the four findings of fact relating specifically 3/ to Issue 2 as set out on page 2 above but does except to the conclusions drawn therefrom. One of the exceptions is that the issue tried was whether FTD News is conducted as an auxiliary to and essentially for the advancement of the main business of the association, whereas the Administrative Law Judge determined that FTD News is published as an auxiliary to and for the advancement of the main purpose of those controlling the publisher. It is, of course, true FTD News can be regarded as being published to advance the florist businesses of FTDA's member-stockholders, and indeed it should be, unless FTDA is to be considered as being an entity sufficiently independent to preclude the conclusion that the member-stockholders, who own FTDA, also own or control the publication. In any real sense the member-stockholders because they own FTDA also own what the association owns, including the publication. It cannot be supposed that the rule in section 132.226(b) Postal Service Manual (39 C.F.R. 132.2(b)(6)(ii)) can be defeated by the organization of a subsidiary publishing corporation. Moreover, the florist member-stockholders do in fact control the publication through their elected representatives who compose the management of FTDA. For this reason I concur in the conclusion of the Administrative Law Judge that the rule in section 132.226(b) is not made inapplicable here merely because ownership and control is maintained through a corporate mechanism. The next question is whether FTD News advances the business of those who own or control it.
Although numerous judicial definitions are quoted in "Words and Phrases" and elsewhere, none of the definitions appears in an authoritative decision by a court which intended to establish a comprehensive definition.
In a commercial setting advertising is generally understood as calling attention to, or providing information about, a business or the goods and services it offers done for the purpose of stimulating business. It may be directed either to the public at large or to a restricted audience. The directory listing clearly serves two related purposes. One is to call the attention of other members to the goods and services offered by the florists listed. The other is to announce to members the identity of florists with whom they can clear accounts through FTDA's clearing service. Accordingly, viewed from the viewpoint of the florist member-stockholders, the primary purpose of FTD News is to advance their business.
Petitioner, however, asserts that FTDA should be looked on as something separate and apart from its members. Even if this view is followed, FTD News nevertheless should be regarded as being conducted as an auxiliary to and essentially for the advancement of the main business of FTDA who owns and controls the publication.
Even if one accepts the Administrative Law Judge's finding that "without the membership list in FTD News, the FTDA system would collapse," as meaning that no other means of distributing the list successfully could be devised, 4/ FTD News is nevertheless to be considered as auxiliary to and essentially for the advancement of FTDA's Flowers-by-Wire system, its main business. An examination of the publication itself even without the confirming testimony establishes that its purpose is to support FTDA's Flowers-by-Wire service to its members. Petitioner contends, however, that because, as the Administrative Law Judge found, the publication is indispensable to FTDA's main business, FTD News cannot be considered auxiliary. But auxiliary has the meaning of aiding or assisting. Lack of essentiality is not a part of the meaning of auxiliary. In many instances assistance is indispensable to the accomplishment of an objective. The publication of FTD News may be considered necessary to FTDA's main business, but that fact would make publication of FTD News no less auxiliary to and for the advancement of FTDA's main business.
Petitioner also objects to characterizing the contents of the publication as advertising because it does not reach members of the public. However, the membership list which not only lists names and addresses but also what can be ordered and the prices charged does advertise to each member the availability of FTDA's services for particular transactions for which, if consummated, FTDA will collect a clearing house fee. The conclusion is inevitable that in sending the list to its members FTDA is advertising in much the same way as a seller does in sending his catalogue listings to his clientele. It is only proper to consider FTD News as being designed and published primarily for advertising purposes.
Petitioner argues that section 132.226(b) has no counterpart in 39 U.S.C. ??4351-4354 and "In this statutory context, section 226(b) runs afoul of the doctrine that a regulation which 'operates to create a rule out of harmony with the statute is a mere nullity.'" The premises for Petitioner's conclusion that the doctrine cited applies here are faulty in two respects:
1. The cited regulation was not out of harmony with 39 U.S.C. 4351-4370 when they were in force; and
2. Section 132.22(b) is not now dependent for its vitality upon the former provisions of law cited.
As Petitioner points out the language used in the regulation appeared in substantially the same form in the law that defined controlled circulation publications, 5/ but not in the laws that dealt directly with second class mail.
The language of section 132.226(b) has a long usage. It appeared in substantially its present form in postal regulations as early as 1887 6/ and continuously since that time. Very clearly, in adding the language in question to the definition of controlled circulation publications in 1948, Congress approved the administrative regulation and applied it to the related category of controlled circulation publications. As the purpose of establishing the controlled circulation category was to give a rate concession to certain publications that could not qualify for second class mail permits, Congress cannot be presumed to have intended to establish more stringent conditions than applied to the second class of mail matter.
Sections 4351-4370 of title 39 U.S.C. lost their status as statutes upon the effective date of the pertinent provisions of the Postal Reorganization Act 7/ and have been superseded by Postal Service regulations. 8/ Whatever conflict may be thought to have existed between the regulation and the repealed statutory provision cannot now be used to invalidate the regulation. To do so would be to breathe new life into statutes Congress has repealed.
It is true that the Postal Reorganization Act contemplates that, as with other classes of mail, second class mail will pay compensatory postage rates. Nevertheless, when Congress originally established the second class of mail matter with substantially its current characteristics, it intended to provide a low cost service for the dissemination of information and knowledge for the benefit of subscribers. Certainly, Congress did not intend to subsidize non-publishing businesses of publishers. Yet, that would be the result if FTD News is classified as second class mail. The result reached here, therefore, is fully consistent with the Congressional purpose in establishing and defining second class mail. 9/
Periodical Issue
Although, as stated above, the conclusion reached on the advertising issue is dispositive of this proceeding, consideration of the periodical issue not only is appropriate, but is highly desirable since as mentioned above, the decision on that question here will be conclusive in other proceedings.
The Administrative Law Judge determined 10/ that the purpose of FTD News is to serve as a vehicle for the membership list and that other non-advertising matter comprising no more than 5.3 per cent of the total publication is incidental only and does not affect the character of the publication. If we accept that determination, and I do, we are free to focus on the fact that we are confronted with a publication that is a directory of substantial size, reprinted and updated each month.
It is unfortunate that no regulation has been adopted amplifying in any way the cryptic term "periodical publication". That situation makes it necessary to rely on the handful of pertinent court decisions and the still fewer decisions of this office. It is perhaps most profitable to consider as a whole the results reached in the judicial decisions 11/ of the first quarter of this century and those of the third quarter before analyzing the precise language of any of the individual decisions. As a whole they reached the conclusion that the word "periodical" in the mail classification statutes required further definition and with the sole exception of the National Railway case involving the Railway Guide, the decisions have upheld the Postmaster General in his application of a narrow definition of "periodical". This was done despite prior administrative constructions to the contrary. Language in Houghton and the other cases should be looked at not so much in the light of the courts giving a universal definition of "periodical" but as stating why the court believed it reasonable for the Postmaster General to conclude that the publications in question were not periodicals.
The corollary of the premise that the court was primarily concerned with whether the Postmaster General's action was reasonable is the conclusion that the words "periodical publication" in the 1879 Act and later codification not only called for definition but actual delimitation by the Postmaster General as the statutory administrator of the law. Looking at the results of court review it is also apparent that under the law the Postmaster General's discretion in defining and delimiting the words "periodical publication", while not unlimited, is substantial. Moreover, those cases decided after enactment of the Administrative Procedure Act, 12/ contain no suggestion that the definition cannot be undertaken on a case by case basis rather than by regulation or published rule. 13/
It is also, of course, profitable to look more closely at some of the cases. In Houghton, which is considered the leading case on second class mail, the court was attempting to articulate a difference between a literary periodical and a series of books containing fiction. While the opinion's primary thrust is specific to that precise subject, some of its language obviously is useful in other applications. The following language from that decision 14/ discussing what a periodical is, is of obvious interest here:
"Ordinarily each number is incomplete in itself, and indicates a relation with prior or subsequent numbers of the same series. It 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."
One type of publication clearly not a periodical is exemplified by the books that were the subject matter of Houghton and its companion decisions. Those are publications consisting of a single work of fiction, or works of a single author or poet, or in another field a single treatise on a particular topic.
In considering the directory section of FTD News, we find that each issue is a replacement 15/ for the prior issue and is intended to be of value to the reader until the next issue is received. It is of value to the subscriber only or least primarily because it informs him of the firms with whom he can place orders in the various communities, the services he can obtain and the price levels. Even though the large bulk of the entries are the same in two successive issues, there are sufficient changes that reliance on the older issue would entail a risk. In the term of the language quoted from Houghton above, next month's listing is a successive chapter of the same story or essay. 16/ While currency or timeliness is neither an indispensable feature of a periodical publication nor a conclusive credential for entry into the second class of mail, it is a factor to be considered along with others in determining whether a publication is a periodical.
For many years postal authorities have struggled with how to square the holding in the Railway Guide case with the Houghton language quoted above.
There the court partially described what may be considered arch typical periodicals.
Obviously, the court did not intend that language to be a definition encompassing all periodicals. It recognized there are other kinds of periodicals, including the Railway Guide--those it denominated elsewhere as non-descript publications. Further the Railway Guide comes so patently within language of the Supreme Court in Smith v. Hitchcock, 226 U.S. 53, as to suggest that the court had the Guide in mind in writing the last sentence of the following passage:
"Without attempting a definition we may say that generally a printed publication is a book when its contents are complete in themselves, deal with a single subject, betray no need of continuation, and, perhaps, have an appreciable size. There may be exceptions, as there are other instances of books. It hardly would be an exception if, where the object is information and the subject matter is a changing one, a publication periodically issued giving information for the time should be held to fall into the second class." (pp. 59, 60).
Under the circumstances the Railway Guide should not be considered, like professional baseball under the anti-trust laws, to have been given by a judicial aberration exceptional treatment not available to others similarly situated. 17/ Clearly, while it is possible that characteristics of the Guide that were obvious to the Houghton court when taken in combination with other characteristics may rob a publication of its periodical classification, those characteristics cannot be said to be per se disqualifying characteristics.
The two most prominent characteristics of the Guide that were at variance with the Houghton description are its apparent repetitiveness and the listing format. In those respects, however, FTD News is indistinguishable from the Railway Guide. On the other hand those publications are distinguishable from the publications involved in the four formal administrative decisions 18/ dealing with listings cited by intervenor Florafax. The first of these, One Spot, emphasizes the repetitive nature of the vast bulk of the contents from issue to issue. Two of the other decisions also indicate the publications they considered are the same in that respect. The remaining decision involved a publication that reprinted the title pages of other publications.
In each case the publications considered did not qualify as periodicals in part at least because any one issue was made up predominately of data carried over from prior issues. In those publications items were reprinted, not to verify that their information was still valid, but merely to comport with the format chosen by the publisher. Thus, if a recording was once identified in a prior issue of One Spot New Release Reporter, there would be little reason to verify from the current issue the present correctness of the information given. A different situation exists with respect to FTD News and the Railway Guide. In both instances data appearing in a current issue that is identical to that in a prior issue takes on new significance in the current issue because it advises the reader in the case of the Guide that a train is running this month on the schedule shown or in the case of FTD News that the same services are available from the same florist during this month. In that sense the listings may be regarded as original rather than consisting of reprinted matter.
It may be observed that the court in Houghton v. Payne, above, included the word "original" in its description. This is significant because the description is based on the Century Dictionary definition cited by the court on page 96 which does not contain it. The word "original" was inserted by the court in its description presumably because the Riverside Literature Series in Houghton consisted largely of reprints of literary works. Moreover, in one of the companion cases, Bates & Guild v. Payne, the court had under consideration publications consisting largely of reprints of piano scores of old compositions. The publication involved in the other companion case, Smith v. Payne, presumably consisted of original novels.
The apparent repetitiveness of the FTD News does not preclude that publication from being considered a periodical. The objects of both the Railway Guide and FTD News are to give information, and the subject matter of each is actually a changing one and not merely one where additional information becomes available. Both are the kinds of publications (aside from the advertising aspect) that the court in Smith v. Hitchcock said might be held to fall into the second class. The listing format did not preclude the Railway Guide from receiving second class mail privileges; it should not preclude FTD News likewise from enjoying them, if it otherwise qualifies.
Conclusion
Petitioner's exceptions are allowed to the extent indicated. As a consequent of the result reached above, Respondent's other exceptions relating to the periodical issue become immaterial. The remaining contentions of Petitioner are rejected as without merit.
In accordance with the foregoing determinations, the recommendation of the Initial Decision to uphold the revocation of the second class mail permit for FTD News is sustained.
Adam G. Wenchel
Judicial Officer
APPENDIX A
to
POSTAL SERVICE DECISION
Initial Decision
of
Administrative Law Judge David J. Knight
October 3, 1973
FLORISTS' TRANSWORLD DELIVERY ASSOCIATION
P.S. Docket No. 1/167
Pages 18-23
* * * * * * *
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 qualification 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 they, 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 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 or 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 any city are rotated each month so that the one at the top 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 Articles 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).
____________________
1/ Respondent's position is set out somewhat more fully in the notice of proposed revocation as follows:
"The law (sections 4351 and 4354 of Title 39, United States Code; section 132.22, Postal Service Manual) provides that only 'newspapers and other periodical publications' constitute mailable matter of the second-class.
"'FTD News' does not constitute a periodical publication within the meaning of the above law. It is a directory with incidental articles of specialized business interest.
"(Section 132.226, Postal Service Manual) Section 4354(c) of Title 39, United States Code, provides that publications designed primarily for advertising purposes may not qualify for second-class mail privileges. They include: (b) 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. The 'FTD News' is owned and controlled by the Florists' Transworld Delivery Association and is operated essentially for the advancement of the main business of the Association. The subject publication is, therefore, designed primarily for advertising purposes.
"The provisions of Title 39, United States Code, which are cited above have been carried forward by section 3 of the Postal Reorganization Act, Public Law 91-375, as implemented by Postal Service Orders 71-9 and 71-10, June 21, 1971."
2/ After the hearing was held in the above-captioned proceeding, Teleflora Delivery Service, Inc., Petitioner in Docket No. 1/206 and Florafax International, Inc., Petitioner in Docket No. 1/207, were permitted to intervene in this proceeding on issue 1, above, hereafter referred to as the periodical issue, on the basis of a stipulation that the disposition of that issue in this proceeding would be binding on the same issue in Nos. 1/206 and 1/207. Florafax did not file a brief on appeal. Teleflora's brief, however, has been very helpful in the consideration of the periodical issue.
3/ Of course, a number of the other findings bear on Issue 2 as well. See Findings 1-6.
4/ I read the finding as saying no more than that successful operation of the system is dependent on each member's having a list such as appears in FTD News. Certainly, other methods of distribution could be devised.
5/ Act of July 3, 1948, Ch. 830, Title II, § 203, 62 Stat. 1262, superseding Act of June 5, 1934, Ch. 392, 48 Stat. 880 (39 U.S.C. 293b). The 1948 Act appeared first in the United States Code as 39 U.S.C. 291b and was codified later as 39 U.S.C. 4421 and 4422.
6/ It is found in various editions of the Postal Laws and Regulations as follows: Sec. 331-1887 ed., Sec. 187-1879 ed., Sec. 280-1893 ed., Sec. 437-1902 ed., Sec. 527-1940 ed. and Sec. 34.27-1948 ed.
7/ See Sec. 5(f) of P.L. 91-375.
9/ Possibly, a publication, substantially all of whose content consists of promotional information of its owner, should be considered neither as "originated and published for the dissemination of information of a public character" nor as "devoted to *** a special industry" within the intendment of former 39 U.S.C. 4354(a). But that proposition is not urged here.
11/ Houghton v. Payne (1904), 194 U.S. 88; Smith v. Payne (1904), 194 U.S. 104; Bates & Guild v. Payne (1904), 194 U.S. 106; Smith v. Hitchcock (1912), 226 U.S. 53; Payne v. National Railway Publishing Co. (1902), 20 App. D.C. 581; National Association of Trailer Owners v. Day (C.A. D.C. 1962), 299 F.2d 137; Dell Publishing Co. v. Summerfield (D.C. 1961), 198 F.Supp. 843 aff'd; sub nom Dell v. Day, 303 F.2d 766; Gilberton World-Wide Publications v. Summerfield, U.S.D.C., D.C., Civil Action No. 1373-60 (1960 unpublished); and Candar Publishing Co. v. Summerfield, U.S.D.C., D.C., Civil Action No. 3227-58 (1960 unpublished).
12/ Act of June 11, 1946, Ch. 324, 60 Stat. 237, now 5 U.S.C. ?? 551-559 and 701-706.
13/ See National Association of Trailer Owners v. Day, Note 2 above. See also in this connection NLRB v. Bell Aerospace, U.S. Sup. Ct. April 23, 1974, 42 LW 4564 at 4572. Of course, leaving it to case-by-case development, places the defining authority with the Postal Service in the hands of the Judicial Officer rather than in the hands of those who administer mail classification matters.
15/ Cumulation or partial cumulation presents a somewhat different problem. It is not involved here. It seems to be present, however, in Shepard's, P.S. Docket No. 1/88, now pending on appeal.
16/ Obviously, not on a subject pertaining to general literature. But Houghton certainly does not restrict second class mail privileges to "literary" publications.
17/ Cf. Radovich v. National Football League (1957), 352 U.S. 445 at 451.
18/ One Spot Publishers, Inc., Initial Decision (not appealed) 7/29/60, P.O.D. Docket No. 1/231; R. R. Bowker, Initial Decision (7/24/63), and Departmental Decision, (1/31/64), P.O.D. Docket No. 2/97; and Zulch & Zulch, Initial Decision (11/2/70), P.O.D. Docket No. 3/46, aff'd 12/9/70; and American Chemical Society, Initial Decision 2/16/73, P.O.D. Docket No. 3/90 (not appealed).