In the Matter of the Petition by

NATIONAL AUTOMOBILE DEALERS USED CAR GUIDE COMPANY,
2000 K Street, N.W., Washington, D. C. 20006

Proposed Revocation of Second-Class Mail Privileges for
"NADA THE OFFICIAL USED CAR GUIDE"

P.S. Docket No. 2/183

February 4, 1975

Rudolf Sobernheim Administrative Law Judge

APPEARANCES:
John M. Burzio, Esq. Hydeman & Mason
1225 19th Street,
N.W. Washington, D. C. 20036
for Petitioner

Grayson M. Poats, Esq.
Law Department U.S. Postal Service
Washington, D. C. 20260
for Respondent

INITIAL DECISION

This is a proceeding initiated by Petitioner pursuant to 39 C.F.R. Part 954 to contest the ruling of Respondent, represented by the Manager of the Mail Classification Division, Finance Department (hereinafter sometimes referred to as the "Manager") which on 24 April 1973, annulled, subject to the outcome of this proceeding, Petitioner's second-class mail privileges in respect of the "NADA The Official Used Car Guide" (hereinafter sometimes referred to as the "publication" or "Guide").

The reasons for this ruling were stated by the Manager as follows (Ex. B to Complt):

"A periodical, as ordinarily understood, is a publi- cation appearing at stated intervals, each number of which contains a variety of original articles by different authors devoted either to general literature of 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. 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. (See Houghton v. Payne , 194 U.S. 88 (1904)).

The subject publication is simply a listing of the average trade-in value, average loan value, and average retail value of used cars and trucks. The monthly issues are primarily an update service with each subsequent issue updating the previous issue. 'NADA The Official Used Car Guide' does not contain any original articles, and is, in fact, a reference book. Accordingly, this publication is not a periodical publication for postal purposes."

Petitioner attempted thereafter to bring itself in compliance with the postal regulations by adding to the Guide an eight-page editorial section and submitted the issues of July and August 1973 to the Manager for his consideration. The latter replied on 2 January 1974 that in the opinion of the Postal Service "the addition of a single editorial does not change the character of this publication which is designed primarily as a listing of used car values to be used by auto dealers, bankers, insurance companies, or others interested in the book value of cars" (Ex. A to Complt).

Petitioner thereupon promptly initiated this proceeding. A hearing was held at which both parties presented evidence. After they had submitted briefs and reply briefs, the Acting Judicial Officer of the U.S. Postal Service on 17 September 1974 issued the Amended Postal Service Decision in Florists' Transworld Delivery Association , P.S. Docket No. 1/167. In consequence, the parties were invited to comment on the effect of that decision on the instant matter. Both parties availed themselves of this opportunity and filed supplemental briefs.

In addition, Petitioners counsel after the hearing, under date of 26 April 1974, submitted two separate statements as to the organizational structure of the National Automobile Dealers Association (NADA) and of Petitioner, prepared by a member of NADA's legal staff, and attached thereto copies of the certificates of incorporation and by-laws of the two organizations. These are received in evidence and made part of the record.

FINDINGS OF FACT

1. NADA is a tax-exempt trade association, originally incorporated in Illinois and reincorporated in Delaware, membership wherein is "open to any individual, partnership, trust, firm or corporation engaged in the business of new motor vehicle retailing ***" (NADA Cert. of Inc'n, Art. Fourth (3)). It has a board of directors the membership of which shall not exceed fifty-nine (NADA By-Laws, Art. II, sec. 1) and an executive committee of nine members ( id ., Art. IV, sec. 1; see Art. III, sec. 7 for the number (4) of regional vice-presidents who are included in the executive committee).

2. Petitioner is a non-stock membership corporation, originally incorporated in Illinois and presently incorporated in Delaware (Pet'r Cert. of Inc'n, Art. Fourth (1), (2)). Its membership consists of the directors of NADA ( id ., Art. Fourth (3)). Its management is vested in a board of directors elected by the members ( id ., Art. Fifth; Pet'r By-Laws, Art. II, sec. 2). The board of directors may consist of up to 17 members (Pet'r By-Laws, Art. II, sec. 1) but, according to the statement submitted by Petitioner's counsel under date of 26 April 1974, presently consists of the nine members of the executive committee of the NADA board of directors.

3. It is one of Petitioner's purposes: "To prepare, compile, publish and issue The National Automobile Dealers Official Used Car Guide, a market report of used car values, and reports, data, analyses, magazines and other publications as the Board of Directors may authorize." (Pet'r Cert. of Inc'n, Art. Third).

4. The Guide published by Petitioner was begun in 1933 and has enjoyed second-class mail privileges since 1934. It currently has some 134,000 subscribers who order a total of about 244,000 copies. NADA alone orders ca. 21,000 copies for its members (T 34). About 69% of the subscribers are new or used car dealers and lending institutions. The balance includes Government agencies at various levels, insurance companies, public libraries and other individuals or enterprises which are interested continuously or intermittently in the data published in the Guide (T 35). Single subscriptions, on an annual basis, are priced at $13.00 (Jt. Ex. 4) and are open to all members of the public (T 32). NADA members receive the Guide free as a NADA membership benefit ( ibid .).

The Guide is published monthly in nine regional editions corresponding to the marketing areas for used cars, as viewed by Petitioner's editor. The latter, in the publication of the Guide, exercises a full measure of editorial judgment and supervises a fairly large staff (T 29).

6. At various times during the past forty years, when federal price regulation or control was in effect in the United States, the Guide has served as an instrument in effectuating such regulation or control in respect of used car prices or trade-in values.

7. The Guide appears in four expanded quarterly issues (January, April, July and October) and eight "short-form" issues for each of the other eight months. The issues placed in the record as joint exhibits by the parties all are part of the Eastern edition and represent both enlarged quarterly and abridged monthly issues published between January 1973 and March 1974. They have been treated by the parties and are assumed to be representative of the Guide both currently and as a whole.

8. The Guide consists of booklets 5 1/2 by 3 1/2 inches in size under a flexible cardboard cover. The quarterly issues consist of about 300 and the shorter monthly issues of about 100 pages, including the eight-page editorial sections introduced in mid-1973. The quarterly issues are bound glued, the monthly issues stapled.

9. a. A recent quarterly issue (Jan. 1974, Jt. Ex. 3) contains on the inside cover the standard Publisher's Note explaining that the "average values listed" in the Guide are based upon reports of "actual transactions by dealers and wholesale auctions throughout each area for which a guide is published." The averages in the Guide are said to "assume a car is clean." Further brief details on standard and add-on equipment and trucks follow. The regional arrangement is set forth on the inside back cover. Following announcement of a price increase and a detachable subscription card there is the title page and, on the reverse, the table of content.

b. These pages are followed by the eight-page editorial section, introduced in July 1973, containing a single article by the Guide's director on "Automobile and Gasoline." Other issues contain other articles, sometimes by other authors, all seven or eight pages in length, on trade-related topics (see also Jt. Ex. 2, 4).

c. The editorial section is followed by various tables, listing the automobile company's manufacturing division for each make; increases and decreases in a car's value, as listed in the Guide, depending on the class of the car (compact etc.), its model year and the extent of mileage use (for instance, the value of a 1973 luxury car is reduced by $1,000 if it was driven between 55,001 and 60,000 miles); an explanation of the Guide's column headings; and the revised insurance symbols.

d. These miscellaneous data are followed by the main sections which for all domestic and many imported passenger cars provide in green type and in columnar table form the average trade-in, average loan and average retail values for each car by model year, model name and body style for seven years back from the year of issue (Jt. Ex. 3). Additional columns list the applicable insurance symbol, body type, model and factory authorized dealer price and shipping weight and in a separate box for cars made by each manufacturer or manufacturer's division the applicable mileage category to enable the user to compute the high/low mileage adjustment.

e. There follows next a miscellaneous identification section of about 80 pages showing the car listed in three-quarter frontal line drawing together with an array of dimensional and other technical data. The part devoted to American cars is followed by a breakdown of the vehicle identification numbers of the various makes and for imported cars a similar breakdown of their serial numbers.

f. The quarterly issue of the Guide concludes with a truck section, printed on yellow paper and to all intents and purposes analogous in content to the passenger car sections.

10. The issues of the Guide for the intervening months, as exemplified by the most recent issue on file (March 1974, Jt. Ex. 4), omit the high and low mileage tables, the miscellaneous identification data and the truck section and provide only the editorial, the model and make identification list and the domestic and imported car value sections in the format and of the content described in Finding of Fact 9d., supra . The reason for the omission of the voluminous identification and truck data dn the high and low mileage tables is that these data do not change sufficiently to warrant inclusion in each monthly issue (see T 65 et seq .).

11. a. The retail, trade-in or wholesale values and the loan values derived from them, listed in the passenger car and truck sections of the Guide, either monthly or quarterly, do not represent reports of actual transactions.

b. Assuming that a particular car is on of the national basic models, i . e . one of the about 1,000 of 5,000 models on which the Guide reports (T 44-45), the basic figures represent the mathematical average of the prices agreed upon for the sale of such basic model in retail or wholesale transactions during the reporting period. This national average is never published, however, unless it happens to coincide with a published regional average (T 55). If the particular car is not a basic model the values listed in the Guide therefor have been keyed to the appropriate basic model (T 44; cf . T 61).

c. After the computer printouts are received, the editor reviews the prices thus shown and makes further adjustments, as evidenced by a printout sheet introduced in evidence as Petitioner's Exhibit 3. The editor considers such factors as national legislation on car components, anti-pollution requirements, foresight exchange developments as to imported cars, strikes, inventories, and other events (T 57-9). The effect of all of these factors on future prices, as viewed by the editor, is reflected in the adjustments made by him to the averages printed out by the computer and the prices which he ultimately publishes.

12. The value or price data published in each monthly issue are changed about 96% from month to month (T 61).

13. The record is replete with additional information as to how Petitioner collects a large volume of data from auction and dealer sales transactions, how raw data are coded and computerized and the final prices developed. For purposes of this proceeding it is, however, unnecessary to go beyond the findings made above.

14. The information published by Petitioner is based on data which at the time of publication of an issue of the Guide are about four to eight weeks old and does not consist of the actual sales prices received by Petitioner but of averages adjusted further as conditions seem to the Guide's editor to require. In these ways the product published by Petitioner differs greatly materially from the Black Book which is the publication involved in National Auto Research Publications, Inc. , P.S. Docket No. 2/131 in which the Initial Decision is issued this same day.

15. The editorial content of the Guide, as represented in post-June 1973 issues (Jt. Ex. 2, 3, 4) comprises about 2 to 3% of the quarterly and about 8 or 9% of the monthly issue content. Such a small amount of editorial matter, representing a single 8-page editorial, does not factually alter the character of Petitioner's publication as one not composed of original articles by different authors.

16. Respondent's mail classification specialist testified that as a former branch manager of a bank in the Virginia suburbs of the District of Columbia and as president of the board of directors of the USPS federal credit union (T 12) he had used the Guide to check on car prices to determine whether loan requests of car purchasers were in line with prices and had discarded old issues whenever new ones were received (T 12-13). He found only the latest information valuable (T 13) and on the basis of his own experience no continuity of use beyond the current issue of the Guide (T 16-17).

17. Petitioner called as witnesses on the use of the Guide the president of a Washington car dealership (T 91) and an assistant vice-president for installment loans of a Washington Bank (T 99). The former testified that he and members of his firm used back issues of the Guide to establish price trends (T 95) which allowed him as a retailer to judge whether cars currently being bought could likely be resold at a profit in the next 30 to 60 days (T 95). This was to him important especially for cars taken as trade-ins which were not in his line and with which he was not familiar (T 98). The assistant vice-president testified that back issues of the Guide were used by the bank to ascertain past values for tax purposes, to determine price trends, to establish car values in suits against borrowers defaulting on car purchase loans and as an internal control in evaluating the loan decisions of personnel under his supervision over a period of time (T 100-102).

18. On the basis of the testimony as a whole I find that past issues of the Guide have usefulness in business and that each monthly or quarterly issue of the Guide is not complete by itself, rendering all prior issues useless and their preservation by the subscriber in any phase of the used-car business futile.

19. It is undisputed and agreed (T 4) that Petitioner's Guide meets in fact all of the technical requirements for a periodical publication which are set forth in 132.2 of the Postal Service Manual.

CONCLUSIONS OF LAW

1. It is obvious that notwithstanding its brief editorial section Petitioner's Guide is neither "a publication ***, each number of which contains a variety of original articles by different authors ***" ( Houghton v. Payne , 194 U.S. 88, 97 (1904)) nor a "non-descript" publication within the meaning of that decision which cites only railway guides as an example thereof ( id ., at 96-97). See Florists' Transworld Delivery Association, supra , and especially at p. 23 regarding the insufficiency of minor editorial content to qualifying a publication as a periodical.

2. That Houghton v. Payne authoritatively interprets the former postal statutes and current postal regulations, continuing the substance of the former statutory terms, and must be strictly applied is well established by the decisions of the Administrative Law Judges and the Judicial Officer of the U.S. Postal Service. Florists' Transworld Delivery Association , supra , and Shepard's Citations, Inc. , P.S. Docket No. 1/88(Initial Decision, 1974), aff'd by the Acting Judicial Officer on 11 October 1974 (Postal Service Decision) and decisions there cited. See also Teleflora Delivery Service, Inc. and Florafax Delivery, Inc. , P.S. Docket Nos. 1/206, 1/207 (Postal Service Decision and Order) and National Auto Research Publications, Inc. , P.S. Docket No. 2/131 (Initial Decision), decided this day. Under these decisions Petitioner cannot prevail. In consequence, it is not entitled to mail the Guide at second-class postage rates.

3. As to the Amended Postal Service Decision in Florists' Transworld Delivery Association , supra , it is not enough to say that the decision is "simply wrong" (Pet'r Supp. Br., p. 1). No argument is offered in support of this flat assertion which has not been raised and refuted in earlier decisions. Petitioner's comment that the Initial Decision in Shepard's Citations, Inc. seems to contemplate an expansion of the application of the nondescript publication concept beyond transportation guides is correct. But Petitioner's Guide is essentially a publication serving a narrow trade interest and not latest news constituting most important current information for the public (see Burns ltr, App. A to Resp. Reply Br.). Like Shepard's Citations the Guide fails to qualify for second-class mail privileges under this heading. Petitioner's reference to the Burns letter (Supp. Br., p. 7), referring to World War II paper allocation problems, has no relevance to the instant dispute about postage rates and does not help resolve it in Petitioner's favor.

4. Nor is Petitioner's Guide a "newspaper" and its publisher therefore entitled to second-class mail privileges for it. It is not purveyor of current news as was the publisher of the "Advance Business Reports" ( Surveys for Business, Inc. , P.O.D. Docket No. 3/37 (1970)) or of the "Black Book" ( National Auto Research Publications, Inc. , supra ). It does not publish data which are "news" but statistical information edited for content rather than solely for form.

5. Accordingly, the Manager's ruling was correct and is upheld. Petitioner is not entitled to second-class mail privileges for its Guide.