In the Matter of the Petition by                      )
                                                                      )
WILLIAM R.GOOD,JR.                                   )
Publisher                                                       )
422 Wall Street                                              )  P.S. Docket No. 2/123
Los Angeles, California 90013                      )
                                                                      )
                                                                      )
Proposed Revocation of Second-Class        )
Mail Privileges for "PATTERSON'S                )
CALIFORNIA BEVERAGE GAZETTEER"       )

APPEARANCES:                                           Roy C. Frank, Esq.
                                                                      9304 Cedarcrest Drive
                                                                      Bethesda, Maryland 20014
                                                                      for Petitioner

                                                                      Arthur S. Cahn, Esq.
                                                                      Law Department
                                                                      U. S. Postal Service
                                                                      Washington, D.C. 20260
                                                                      for Respondent

Lussier, Edward F.

POSTAL SERVICE DECISION

This case is before the undersigned on Petitioner's appeal from the Initial Decision of Administrative Law Judge Rudolf Sobernheim upholding the revocation of second-class mail privileges for the publication "Patterson's California Beverage Gazetteer". The basis for the decision was the conclusion that the publication is not a "periodical publication". A second basis for revocation, that the publication contained in excess of 75% advertising in more than one-half of the issues during a 12-month period, was not reached in the Initial Decision in view of the disposition of the case on the first basis, and therefore is not an issue in this appeal proceeding.

In a very thorough Brief Petitioner has taken exception to a number of factual findings and legal conclusions it considers applicable to the issue of whether the publication is a periodical. The exceptions to the findings of fact will be taken up in the order presented by Petitioner.

Petitioner's first exception is to that part of Findings of Fact 4 and 5 which attributes to Respondent's mail classification specialist a revised count of 531 pages for the October 1974 issue of the "Gazetteer". In this, as in other exceptions taken by Petitioner where Respondent has not addressed itself to the exception, I have made an independent review of the record. Such review does not reveal the evidentiary basis for the finding. However, Finding of Fact 5 appears to clarify the matter by pointing out that the "white" section of the publication was counted as 394 pages by the mail classification specialist "until the end of the hearing" and that "Respondent in its Brief recounts" it as 381 pages. Judge Sobernheim obviously accepted the testimony, rather than the Brief, as controlling since he found the total number of pages to be 544 pages which is consistent with the testimony of the "white" section being 394 pages. Finding of Fact 4 is modified to delete reference to the revised count being that of the senior mail classification specialist. Finding of Fact 5 needs no revision. The exception is allowed to the extent of the modification indicated.

Petitioner next takes exception to the first sentence of Finding of Fact 6 finding that the first section of the "Gazetteer" "contains ten to fifteen short stories, either writing up a particular restaurant, bar, trade affair or kind of alcoholic beverage, or discussing alcoholic beverage industry or trade matters." It contends that actual inspection of the contents reveals far more items qualifying as "articles" than are shown in the table of contents found on page 5 of the October 1974 issue. It is apparent that there are a number of items not listed in the table of contents which could qualify as "articles". However, the finding that the first section contains ten to fifteen short stories was not intended to discredit all of the remaining material as "articles" as is made obvious by the further treatment of the matter in the Initial Decision. The Administrative Law Judge found that the first section contained 100 pages (Finding of Fact 4). He excluded therefrom 35 pages considered by Petitioner as well as Respondent's mail classification specialist as advertising pages (Findings of Fact 7, 13). That he gave the Petitioner the benefit of the remaining 65 pages being considered articles for purposes of his decision is evident from Conclusion of Law 10 wherein he attributed 11.9% of all pages to articles. The 65 pages mathematically constitute 11.9% of the total 544 pages in the October 1974 issue of the publication. Although Respondent's original Brief before the Administrative Law Judge took the position there was not a variety of original articles by different authors (Brief, page 8), it takes no exceptions to the Initial Decision. While I have serious doubt as to whether all of the nonadvertising pages in this first section of the "Gazetteer" consist of "articles", it will be assumed for purposes of this appeal that the publication consists of 11.9% articles. Such being the case the exception becomes immaterial and is accordingly disallowed.

Petitioner takes exception to the statement in Finding of Fact 9 that "Respondent would allow only 6" out of 36 pages claimed by

Petitioner to be nonadvertising pages in the second section of the "Gazetteer", for the reason that Respondent's mail classification specialist testified that 36 pages were nonadvertising pages (Tr. 16, 17). The matter of the testimony is not entirely free from doubt since the mail classification specialist also testified that 16 of these pages consisting of public service advertising were considered advertising (Tr. 16). The quoted statement appears to relate more to the advertising issue, mooted on appeal, and furthermore does not appear to be an evidentiary finding but rather a statement of the position taken by Respondent in the Brief filed with the Administrative Law Judge. The exception is disallowed.

Petitioner takes exception to the accuracy of two statements made in Finding of Fact 10. The first is the statement that the third section of the publication referred to as the "Green pages", gives "the cost to the public". Petitioner points out that the listing is of he fair trade price which is the minimum price but that a retailer may sell at any higher price the purchaser would pay. I think this is fairly obvious from Judge Sobernheim's further finding in Finding of Fact 11 that the prices in the "green pages" are the fair trade consumer prices. This exception is disallowed. Petitioner also excepts to the last sentence in Finding of Fact 10 finding that every seller listed in the green pages has a price advertisement in the second section of the publication. Petitioner contends "This is not precisely accurate unless the writer of the brief has overlooked an advertisement. In the first column of page 286-A it will be noted that under the name CABIN STILL-Hillbilly-See Old Cabin Still, the name L. J. Morganti appears as a seller of that brand of liquor. That name cannot be found in the listings of display advertisers or price listings set forth on page 280A-4". My review of the publication reveals, however, that the name "L. J. Morganti" is found in the advertisement on page 18-A as a distributor of Miller High Life. This exception is disallowed.

Petitioner takes exception to the last sentence of Finding of Fact 12 finding that "Respondent, on the other hand, contends that it performs a legal duty in publishing the green pages and that they are not advertising since not paid for by advertisers". It is obvious, as stated by Petitioner in its exception, that the word "Respondent" was intended to be "Petitioner". Petitioner takes exception to the sentence on the basis that it never contended that it was performing a legal duty by publishing the information contained in the green pages. It is Petitioner's position that there is nothing in the California law compelling the "Gazetteer" to publish the information contained in the "green pages". I do not read the Initial Decision as stating the contrary. The finding is most reasonably understood in the light of Petitioner's Brief before the Administrative Law Judge, and again in its Brief on Appeal, indicating that the publication of the price schedules satisfies a state legal requirement imposed upon the person filing the price schedule with the state. That Judge Sobernheim was not referring to a legal duty of the Petitioner is evident from the last sentence of his Finding of Fact 14c

"That Petitioners keep price listings current is obviously in the sellers' and also in the licensees' interest and is necessitated by the fair trade-posted price system which the alcoholic beverage industry enjoys in California and not by Petitioner's zeal or duty in serving any command of the law."

This exception is disallowed.

Petitioner takes exception to that portion of Finding of Fact 13 which summarizes Respondent's position regarding the number of advertising pages in the second section of the "Gazetteer" as 388 on the basis that the testimony of the mail classification specialist reveals the number to be 358 (Tr. 17). This is the same argument made in connection with its exception to Finding of Fact 9, discussed above. This exception is disallowed for the same reason the similar exception to Finding of Fact 9 was disallowed.

Petitioner takes exception to all of Finding of Fact 14a except that portion reading " * * * I find that the Gazetteer is a trade publication, devoted to the alcoholic beverage industry * * * ". Finding of Fact 14a reads as follows:

"On the record as a whole and the detailed findings of fact made herein I find that the Gazetteer is a trade publication, devoted to the alcoholic beverage industry and published for the purpose of providing (i) licensees with the prices at which they can buy alcoholic beverages from sellers and including the fair trade prices below which the licensees may not sell to the public, and (ii) sellers with a forum for placing their wares and prices systematically before the eyes of the licensees. All of this is provided for the trade only, shielded from the eyes of the consuming public."

Petitioner's argument explains the sensible need for such a publication as the "Gazetteer" to convey necessary price information to the industry and characterizes the purposes more broadly in terms of conveying marketing information. Petitioner quotes specifically the testimony of its managing editor that " * * * the overall purpose is to bring the retailers into the ability of being able to comply with the sanction of the law (Tr. 55)". That pricing information and identification of sellers are the primary elements of the publication is obvious from even the most casual examination. On the basis of my review of the entire record I find the findings in Finding of Fact 14a to be supported. This exception is disallowed. Petitioner's Appeal Brief also states that it "takes a limited exception to Finding 14b^1/ since he does not quite understand just what the Administrative Law Judge is referring to by the words 'business success'. If he means financial success, it is undoubted that the advertisements contribute the money necessary to keep the publication running. On the other hand, if he means success in terms of getting subscribers, which in turn normally results in greater advertising revenues, it appears from the testimony of Mr. Sloan the green pages are primarily responsible for subscriptions (Tr. 56-57)."

The Initial Decision adequately describes the interrelationships between the "green pages" and the paid advertising pages, which, more often than not, also list price information. The testimony of Mr. Sloan, Petitioner's Managing Editor, does indeed make clear that pricing information is the principal reason for subscriptions. To the extent that Petitioner would interpret the finding as relating to the financial benefit which the publication receives from the paid advertising rather than to any denial that subscriptions are not due primarily to the pricing information, I would agree.

Petitioner's first exception to the Conclusions of law is to the first sentence of Conclusion of Law 7 reading "The parties have in their briefs presented little background of these regulations or of the arguments justifying either an affirmative or negative answer nor have they cited any decisions applying the cited sections." Petitioner points to certain references in its Brief before Judge Sobernheim as bearing upon the matter. After reading the references I find the exception at best arguable. In any event it is immaterial as the matter relates to the issue, not on appeal, of whether "advertising" within the meaning of certain postal regulations means only paid advertising. The exception is disallowed.

Petitioner states that it cannot disagree with the first sentence of Conclusion of Law 8 which concludes that the advertising issue is immaterial and need not be decided unless it is first determined that the "Gazetteer is a periodical publication entitled to second class mail privileges". Nevertheless, Petitioner asks that the matter be sent back to the Administrative Law Judge for a decision on the advertising question. Since I find myself in agreement with the conclusion in the Initial Decision that the "Gazetteer" is not a periodical publication entitled to second class mail privileges and this conclusion disposes of the case, the request for remand for a decision on the second issue is denied.

Petitioner takes exception to the second sentence in Conclusion of Law 8 that the periodical issue is governed by Florists' Transworld Delivery Association (hereinafter "FTD"), P.S. Docket No. 1/167, which Petitioner considers not controlling. Petitioner also takes exception to that part of the sentence indicating that a postponement stipulation, which was based upon a final decision first being rendered in the FTD case, recognized the applicability of that case to the instant case. Petitioner maintains that its consent to the postponement was motivated by a desire to delay the instant hearing as long as possible. The postponement motion, made by Respondent and consented to by Petitioner, states that "The parties believe it will be in their best interest to continue the hearing date in this case until a final decision is rendered in the Florists' Transworld Delivery Association case, (P.S. Docket No. 1/167)". The attorneys for the parties are both capable and experienced and it appears to me that both knew what they were doing. The postponement stipulation clearly conveys the idea that the decision in FTD will have some bearing on the instant case although it does not reach the level of a binding agreement to be held to the result in that case, which easily enough could have been done by the use of different language. However, the Initial Decision and my decision on appeal, are not dependent upon finding any such agreement. To the extent Petitioner's exception would read the Initial Decision as concluding otherwise, it is disallowed. That portion of the exception disagreeing with the applicability of FTD to the instant case will be taken up in Petitioner's next exceptions.

Petitioner treats Conclusions of Law 10, 11 and 12 together, taking exception to the reliance upon the FTD decision and to what Petitioner in essence contends is a distorting of the test for a periodical set forth in Houghton v. Payne, 194 U.S. 88. Petitioner contends that strictly construed the language of the court in that case simply means that a periodical must have as part of its contents a variety of original articles by different authors and that the Initial Decision in effect amends Houghton v. Payne by concluding that it is not the percentage of Houghton v. Payne content as such but the character of the publication as a whole that is determinative of whether the publication is a periodical. Petitioner also objects to the concept of an unknown percentage of articles being a test of whether a publication is a periodical.

Petitioner is quite correct, of course, in stating that no definite percentage is set forth as the minimum percentage of Houghton v. Payne content. I consider it inconceivable, however, that the court was attempting to define only incidental characteristics of a periodical publication. To suggest that the inclusion of any material coming within the Houghton v. Payne definition qualifies the publication for treatment as a periodical publication would render the definition practically meaningless. The decision in the FTD case should have set any hopes for such a limited interpretation of Houghton v. Payne to final rest.

While the Initial Decision mentions the percentage figure attributed to articles, it is but one of many factors expressly mentioned in the analysis given by Administrative Law Judge Sobernheim as a basis for his conclusion that the publication is not a periodical publication. As I view it that conclusion applied a proper test to the facts and is correct. Accordingly, Petitioner's exceptions to Conclusions of Law 10, 11 and 12, and to the ultimate result in Conclusion of Law 13 are disallowed and the Initial Decision is hereby affirmed.

____________________

1/ Finding of Fact 14b reads as follows:

"It is obvious that both licensees and sellers deem the availability of a publication, such as the GAZETTEER, important to the conduct of their business and that, contrary to the impression which Petitioner's managing editor sought to leave in his testimony, the advertisements of sellers are the key to the GAZETTEER's business success rather than the mere publication of the green pages."