In the Matter of the Complaint Against

ALASKA EMPLOYMENT
894 National Press Building at
Washington, DC 20045

P.S. Docket No. 7/166;

Cohen, James A.

APPEARANCE FOR COMPLAINANT:
DanielS. Greenberg, Esq.
Consumer Protection Division
Law Department
United States Postal Service
Washington, D.C. 20260

APPEARANCE FOR RESPONDENT:
Donald G. McGrath, Esq.
McGrath, Meyer, Lieberman & Lipp
The Statler Building, Suite 1400
107 Delaware Avenue
Buffalo, NY 14202
Deborah Shur Trinker, Esq.
1150 17th Street, N.W.
Washington, DC 20036

POSTAL SERVICE DECISION

Respondent has appealed from the Initial Decision of an Administrative Law Judge which holds that with regard to the sale of the "Alaskan Employment Kit", Respondent is engaged in a scheme for obtaining money through the mail by means of false representations in violation of 39 U.S. Code § 3005.

BACKGROUND

On March 10, 1980, the Consumer Protection Division, Law Department, U.S. Postal Service, filed a Complaint, alleging that Respondent, in connection with the sale of the Alaskan Employment Kit, is engaged in a scheme to obtain money through the mail in violation of 39 U.S. Code § 3005. Specifically, in paragraphs II, III, and IV the Complaint alleges:

II

"A. That said advertisement makes statements about the various aspects of jobs in Alaska, and about Respondent's offer of assistance to job seekers, the sum and substance of which are essentially that:

(1) Jobs in Alaska are now among the most highly paid in the world;

(2) Such jobs pay $1020 to more than $1600 per week;

(3) Totally unskilled workers can start work at $1020 weekly (including overtime);

(4) Relatively unskilled jobs pay $12 to $19 per hour;

(5) Room and board are paid by the employer, or are available at nominal cost;

(6) Transportation to Alaska is forwarded by the employer, 'no matter whether (the employee) can run a dozer, weld, handle a shovel, fly a helicopter or even wait on tables';

(7) Respondent is the expert on the companies which are hiring;

(8) Respondent has prepared a kit which includes among other things, a complete instruction manual and a directory listing 1320 current employers in the Arctic;

(9) the jobs will go to those who know where and how to apply;

(10) If the purchaser of said kit does not obtain satisfactory employment in Alaska within 90 days of receipt of said kit, the kit may be returned for a refund;

B. That, assuming arguendo the statements enumerated in subparagraph II A, supra, are true in some cases, Respondent's advertisement fails to make the following affirmative disclosures of material facts:

(1) Most jobs in Alaska do not pay the wages cited by Respondent;

(2) Most jobs in Alaska pay only the minimum wage;

(3) Most of the higher paying construction jobs in Alaska go only to union members, based upon seniority;

(4) Many employers hire only union members, based upon seniority;

(5) Unions have a preferential hiring practice of first hiring Alaskan residents;

(6) Alaska's unemployment rate is among the highest in the United States;

(7) Most jobs in Alaska do not include room and board in addition to the salary;

(8) Where room and board are available at 'nominal' cost, said cost is often equal to, or higher than, the normal costs for same in other states;

(9) Most companies do not pay transportation costs from the employee's current place of residence to Alaska;

(10) Most companies do not advance transportation costs from the employee's current place of residence to Alaska;

(11) Most of these few companies which do advance transportation costs from the employee's current place of residence to Alaska deduct same from the employee's wages;

C. That, by means of the statements enumerated in subparagraph II A, supra, coupled with Respondent's failure to make affirmative disclosure of the material facts enumerated in subparagraph II B, supra, Respondent represents, in substance and effect:

(1) That there are many jobs currently available in Alaska which pay $12 to $19 per hour;

(2) That there are many jobs currently available in Alaska at which totally unskilled people can start at $1020 weekly (including overtime);

(3) That there are many jobs currently available in Alaska at which relatively unskilled people can earn $12 to $19 per hour;

(4) That most companies will pay the transportation costs to Alaska of the workers who fill the jobs described in subparagraphs II C (1) through (3), supra;

(5) That most companies will pay the room and board of the workers who fill the jobs described in subparagraphs II C (1) through (3), supra, or will provide same at little cost in comparison to what the employee would pay in his home state;

(6) That skilled workers can likewise reasonably expect to obtain the jobs with the salaries and benefits described in subparagraphs II C (1) through (5), supra;

(7) That most people who purchase the Alaskan Employment Kit can reasonably expect to obtain, within 90 days of receipt of said kit, a job in Alaska providing the salaries and benefits described in subparagraphs II C (1) through (6), supra;

(8) That said kit contains a list of 1320 employers currently seeking to fill jobs providing the salaries and benefits described in subparagraphs II C (1) through (6), supra;

III

That the representations described in subparagraph II C, supra, are materially false as a matter of fact;

IV

A. That, based upon said representations, Respondent induces readers thereof to remit money or property through the mails to Respondent;

B. That Respondent employs the captioned name and address in pursuance of said scheme, as shown by Exhibit A attached thereto."

In its Answer to the Complaint, Respondent denied the allegations in the Complaint, except that it admitted the publication of the advertisement attached to the Complaint as Exhibit A. In addition, Respondent asserted as an affirmative defense that the claims in the Complaint are intended to camouflage an illegal conspiracy on the part of the Complainant and the State of Alaska to illegally and unconstitutionally stp in-migration of U. S. citizens seeking employment in Alaska.

A hearing was held before an Administrative Law Judge at which both parties introduce evidence and participated in the examination and cross-examination of witnesses. Complainant called as witnesses Mr. Dale Cheek and Mr. John Post, both of whom are employees of the Government of the State of Alaska. Respondent called as witnesses Mr. William Johnson, a Postal Inspector, and Mr. Thomas H. Lucas, owner of Alaska Employment. On the basis of the testimony presented and the exhibits in the record, the Administrative Law Judge concluded that the Respondent makes the representations alleged in paragraph II(c) of the Complaint and that the representations are material and that they are false. Accordingly, he concluded that Respondent is engaged in activities which are in violation of 39 U.S. Code § 3005.

RESPONDENT'S EXCEPTIONS TO THE INITIAL DECISION

Respondent has stated four exceptions to the Initial Decision, each of which is discussed below.

I. The Administrative Law Judge erred in not permitting evidence on the affirmative defense.

In its Answer, Respondent alleged as an affirmative defense that a conspiracy existed between Complainant and the Government of Alaska to prevent in-migration to Alaska. Respondent argues that the Administrative Law Judge erred by preventing full inquiry into this matter at the hearing. It is Respondent's position that the case of Hicklin v. Orbeck, 437 U.S. 518 (1978), which held unconstitutional the Alaska Hire Law, similarly renders unconstitutional any policy inhibiting in-migration by the State of Alaska, including the prosecution of this case. The presiding Administrative Law Judge refused to take testimony on the alleged conspiracy, ruling that it was not an issue in this proceeding (Tr. 132). Respondent argues that its defense was seriously hampered by that ruling, because it affects witness credibility and "taints the entire proceeding."

Respondent does not explain how its case was prejudiced by the inability to develop this defense. It is, indeed, difficult to see how the alleged conspiracy could have an effect on the truth or falsity of the statements in the advertisement except as it might affect witness credibility by causing Complainant's witnesses to tailor their testimony to the alleged policy. With regard to credibility, the presiding Administrative Law Judge allowed Respondent full latitude in the examination of witnesses (Tr. 132-33, 303). Accordingly, there was no prejudice to Respondent's defense of the charges of the Complaint and no error was committed by the presiding Administrative Law Judge. Respondent's Exception No. 1 is therefore without merit.

II. The Administrative Law Judge erred by finding a need for the affirmative disclosures alleged in paragraph II B of the Complaint.

The Complaint alleges that Respondent fails to make certain affirmative disclosures and that failure, when combined with statements in the advertisement, has the effect of causing the representations in paragraph II C of the Complaint to be made. The Administrative Law Judge found that " i n its advertisement, Respondent by direct statement, by inference, and by failure to make full disclosure, makes the representations which are set forth in paragraph II C of the Complaint (I.D. FOF 3)." Respondent argues that the Administrative Law Judge found a need for the affirmative disclosures and that this finding is in error.

The finding of the Administrative Law Judge is based on his review of the language of Respondent's advertising. On pages 7, 8 and 9, the Administrative Law Judge identifies each of the alleged representations and cites the specific language in the advertisement which, standing alone, he consider to form the basis of the representations alleged in the Complaint. The Administrative Law Judge does not find that the affirmative disclosures alleged in paragraph II B are required although it is clear that such affirmative disclosures are not included in Respondent's advertising. He does find that Respondent's advertising does not make "full disclosure" and that by failure to make full disclosure that the representations alleged in paragraph II C of the Complaint are made. This finding is correct and Respondent's exception thereto is without merit.

Respondent raises additional arguments under this exception which do not relate directly to the affirmative disclosure question. It argues that Complainant's reliance upon Donaldson v. Read Magazine, Inc., 333 U.S. 178 (1948) is misplaced because of factual distinctions between that case and this. It is argued that the ordinary mind would not be misled by Respondent's advertising, although some "may think it involves exaggeration or puffing."

There is more than exaggeration and puffing in Respondent's advertisement. The advertisement would lead the ordinary mind to believe that there is a ready availability of well paying positions in Alaska for those of modest skills (I.D. pp. 7-9). It specifically speaks of $12 to $19 per hour for relatively unskilled jobs, and lists waiting on tables and handling a shovel among the skills for which such wages are available (I.D. p. 7; App. A). It speaks of the eagerness of local and multinational corporations to forward transportation to obtain the services of such employees (I.D. p. 7; App. 7). The advertisement also represents that a prospective employee could expect to receive room and board either free or at nominal cost (I.D. p. 7; App. 7). A person of ordinary mind, would conclude that these representations are made in Respondent's advertising and these representations would induce the purchase of Respondent's employment kit. The evidence in the record, however, establishes that the positions represented are not readily available (e.g. I.D. pp. 12-14, 17, 18 and citations contained therein; Tr. 30-33). Thus, material facts are misrepresented and as such, the representations go beyond mere puffing. Harris v. Rosenberger, 145 F. 449 (8th Cir. 1906); G. R. Paro, P.S. Docket No. 6/111 (PSD 1979).

Respondent argues that its advertisement would lead the ordinary mind to conclude that there are many high paying jobs in Alaska, some of which offer advance transportation and room free or at nominal cost. That admission is consistent with the reading of the advertisement found in the Initial Decision as far as it goes. However, the additional element which changes the characterization which Respondent would place upon the advertisement is the ready availability of such positions. Language cited in the Initial Decision clearly would lead the ordinary mind to conclude that such jobs are readily available. As previously stated the evidence presented establishes the contrary (Tr. 30-33; CX-6).

For the reasons stated, Respondent's arguments under Exception II are found to be without merit.

III. The Administrative Law Judge erred by not making appropriate findings of facts and conclusions of law.

Respondent enumerates 11 proposed findings of facts and two proposed conclusions of law which were submitted to the presiding Administrative Law Judge but which were not adopted as findings and conclusions in the Initial Decision. Respondent contends that it was error on the part of the presiding Administrative Law Judge to fail to make these findings and conclusions in the Initial Decision. Each proposed finding and conclusion is addressed below in the order presented:

1. "The jobs in Alaska are among the most highly paid in the world, with a per capita income of $20,000/$24,000 per year."

In support of this proposed finding, Respondent refers to Exhibit R-3 and Exhibit A to its Motion to Dismiss filed April 9, 1980. Exhibit R-3 is a document titled "Alaska Annual Planning Information, FY 1980" published by the Alaska Department of Labor. Exhibit A is a news release issued by the United States Department of Labor, Bureau of Labor Statistics, on November 15, 1979. Exhibit R-3, on page 11 projects an average annual wage for non-agricultural workers of $24,200 per year by 1980. Exhibit A to the Motion to Dismiss states that the average annual pay in Alaska in 1978 was $20,487, which was the highest in the United States. Respondent makes no attempt to relate the relevance of this proposed finding to the advertisement which claims wage rates which project to annual rates of $50,000 to $80,000. Moreover, the relation of wage rates in Alaska to the rest of the United States does not establish the relation of those wage rates to the rest of the world, which is what Respondent advertises. Thus the presiding Administrative Law Judge did not err in refusing to make this finding.

2. "That there are many jobs available in Alaska for unskilled workers at salaries of $1,020 per week, including overtime and double time, and that there are many jobs in Alaska paying over $1,600 per week, including overtime and double time."

Respondent supports this position by reference to testimony of Complainant's witness, Dale Cheek, regarding the wage rates in certain industries. However, the quantity and availability of positions at those rates of pay is the relevant issue here. The citations to the record relied upon by Respondent to support its position are based on admissions by Mr. Cheek that certain rates of pay for certain jobs do exist. This evidence does not establish, however, that there are "many" such jobs available. Rather, the evidence establishes that few such jobs are available. (See I.D., pp. 13, 17-18 and citations therein; Tr. 30, 169; CX-3) Accordingly, the presiding Administrative Law Judge did not err in failing to make the proposed finding.

3. "That many jobs in Alaska pay $12 to $19 per hour and more."

Respondent supports this position by reference to "3, supra." It is assumed that Respondent is referring to the argument made under proposed finding of fact 2. With respect to this particular issue, Mr. Cheek testified as follows:

"Q: ...Do most jobs in Alaska pay $12 to $19 per hour?

A: No. ...

Q: Now, let us consider skilled workers. Are there many jobs currently available in Alaska which pay $12 to $19 per hour for skilled workers?

A: There would be some jobs available for skilled workers, yes. ...

Q: What sort of jobs would these be where skilled people can get $12 to $19 per hour?

A: I am aware of some electrical technician positions that have been recently available in the Cold Bay gathering field area. I have information that some other professional positions are open in the petroleum industry, for example, there would be very little if any, jobs now in construction." (Tr. 30-31).

While there are positions in Alaska that pay the alleged hourly wage, again the issue is whether there are "many" and whether they are available. On the evidence in the record, (see citations under proposed FOF 2) the Administrative Law Judge did not err in failing to find that there are many such jobs available and therefore refusing to make the proposed finding.

4. "That employers in Alaska will give free room and board or provide it at a nominal cost ($6 to $10 per day.)"

Respondent argues that various portions of the testimony of Mr. Cheek provide support for this finding. Respondent cites Mr. Cheek's testimony that "quite often that room and board is part of the compensation..." (Tr. 18), as well as Mr. Cheek's reference to specific areas and industries in which room and board is either furnished or provided at a charge of $6 to $10 per day (Tr. 32, 72, 88, 89). While the cited testimony of Mr. Cheek would support a finding that some firms provide room and board, he also testified that most companies and most jobs in Alaska do not include the payment of room and board to workers, and those that do are generally in remote areas and for skilled workers (Tr. 30, 32-33, 72, 90).

The portions of the testimony cited by Respondent were considered by the Administrative Law Judge in the Initial Decision (I.D. pp. 13 & 14). However, when weighed against the testimony that it is only some and not most jobs and companies that provide free room and board, and generally only those found in remote areas for skilled workers, the Administrative Law Judge concluded that the evidence did not support this finding. Moreover he concluded that the evidence does not establish that the charge of $6 to $10 per day is nominal even though it is less than the cost to live in Anchorage (Tr. 90). The findings of the Administrative Law Judge are supported by the record and are correct. Accordingly, the presiding Administrative Law Judge did not err in failing to make the proposed finding.

5. "That many local and multinational corporations forward transportation to bring in employees."

Again, Respondent cites the testimony of Mr. Cheek regarding relatively unusual circumstances in which transportation costs were paid or advanced (Tr. 32, 68, 73, 91, 117-18 & 124). It is contended that on this basis, the Administrative Law Judge should have found that many local and multinational corporations forward transportation to bring employees to Alaska. However, the cited testimony about instances where transportation has been forwarded or advanced constitutes exceptions to the normal rule, which is that most companies do not advance or pay transportation costs to bring employees to Alaska (see I.D. p. 13; Tr. 30, 72-3, 125-7). Accordingly, the record does not support the finding proposed by Respondent.

6. "That Respondent developed the Alaskan Employment Kit which includes an instruction manual, sample letters, sample resume and listing of 1,320 employers set up in photocopy labeling format which provides an inexpensive means for searching for employment in Alaska."

Respondent argues that this is established by the testimony of its witness, Thomas H. Lucas (Tr. 321-25). On page 6 of the Initial Decision, the Administrative Law Judge described in greater detail than does the proposed finding of fact, the contents of the Alaskan Employment Kit. On page 19 of the Initial Decision, it is stated that Mr. Lucas, testified that his kit "provides a way for persons seeking jobs to contact as many employers as possible in as cheap a manner as possible." The recitation of the testimony of Mr. Lucas in the Initial Decision does not establish whether that testimony was believed and accepted as a fact. However, the substance of the proposed finding does not relate to the allegations of the Complaint and therefore it was unnecessary for the presiding Administrative Law Judge to have made the proposed finding. Accordingly, the Administrative Law Judge did not err by failing to make the finding proposed by Respondent.

7. "That Respondent updates its kit to provide current information."

Respondent argues that this finding should have been made because certain portions of Mr. Cheek's testimony were based on an outdated version of Respondent's kit. It is true that some of the testimony was based on an outdated version of the kit but that testimony was stricken from the record (Tr. 49-50). Further, even if the testimony had not been stricken, the proposed finding itself has no relevance to the allegations of the Complaint. It therefore was proper for the Administrative Law Judge to have refused to make this finding.

8. "The jobs go to those who know where and how to apply."

This proposed finding has no relevance to the issues in controversy and therefore the Administrative Law Judge properly concluded that no such finding should have been made.

9. "That Respondent's 90-day guarantee has been honored."

Respondent argues that such a finding should have been made because the Postal Inspectors who investigated the case found that the guarantee had been honored. While there is evidence on which this proposed finding could have been made (Tr. 298), the Complaint does not allege that Respondent has failed to honor its 90-day guarantee. Therefore, this proposed finding is not relevant to the issues in dispute. Accordingly, it was not error for the presiding Administrative Law Judge to refuse to make this proposed finding.

10. "Alaska has a large group of job applicants who are unqualified for the jobs they are seeking. Many of these unqualified applicants are on unemployment rolls and distort its unemployment statistics."

Respondent argues that the evidence establishes that the unemployment statistics for Alaska are distorted by the high number of unemployables. In this regard Respondent again cites Hicklin v. Orbeck, supra. Respondent does not address the relation of the proposed finding of fact to the specific allegations in the Complaint and none is perceived. Accordingly, the Administrative Law Judge did not err by failing to make this proposed finding of fact.

11. "Complainant has submitted no proof that an ordinary mind has been, or is likely to be, misled by Respondent's ad."

Respondent argues that the testimony presented by Complainant's witnesses has demonstrated the fallacy of Complainant's assertions about the necessity of affirmative disclosures. It also argues that there is no testimony in the record which shows that an ordinary mind has been or is likely to be misled by Respondent's advertisement which has been proven to be true "not only in its various single representations, but when read as a whole." (Respondent's Brief, p. 13).

Arguments relating to the requirement for affirmative disclosures have previously been addressed and found to be without merit. Therefore, further discussion of these arguments is unnecessary.

The absence of testimony to show that an ordinary mind has been or is likely to be misled has been addressed on several occasions. Both the courts and this Office have found that such testimony is unnecessary. See Standard Research Labs, P.S. Docket Nos. 7/78 and 7/86 (P.S.D. 1980) and cases cited therein. Respondent's exception provides no basis to alter this conclusion.

Respondent's argument that the representations of its advertisement individually and when read together are true is also without merit. It has been held that although every sentence in an advertisement separately considered may be literally true, nonetheless, the advertisement as a whole may be completely misleading. Donaldson v. Read Magazine, 333 U.S. 178, 188-89 (1948). The presiding Administrative Law Judge in this case found Respondent's advertising to be misleading and cited the language of the advertisement on which he relied (I.D. pp. 7-9). The Administrative Law Judge's findings and conclusions in this regard were proper. Accordingly, it was not error for the presiding Administrative Law Judge to refuse to make the proposed finding.

12. "The Administrative Law Judge erred by not making the following conclusions of law:

I. Complainant has failed to provide substantial evidence of the allegations in the Complaint.

II. The affirmative disclosures, alleged by Complainant to be required in the ad, are not necessary to prevent the ad from being misleading."

Respondent argues these two points as they apply to each of the items listed under paragraph II B of the Complaint, which alleges that Respondent's advertisement fails to make certain affirmative disclosures of material facts. As was previously stated the Administrative Law Judge did not conclude that Respondent's advertising was in violation of 39 U.S.C. § 3005 because it failed to make the disclosures enumerated in paragraph II B. Rather he found that Respondent by direct statement, by inference and by failure to make full disclosure, makes the representations alleged in paragraph II C of the Complaint. This conclusion was properly reached and therefore a review of the affirmative disclosures alleged in paragraph II B is unnecessary. For the reasons stated in the Initial Decision and in this Decision the Administrative Law Judge properly refused to make the conclusions of law proposed by Respondent.

IV. The Administrative Law Judge erred by refusing to hear testimony by Respondent on surveys of consumer reaction or understanding of the ad.

Respondent contends it was precluded from introducing testimony with regard to the preparation of the advertisement and reviews or surveys with regard to how the advertisement would be received by consumers. According to Respondent the testimony should have been permitted because it was ot offered to prove the truth or falsity of the statements of the surveyed consumers, but only that the statements were made to the witness in the conduct of his business. For this purpose, Respondent contends the testimony was not subject to the hearsay rule. Complainant argues that the testimony was properly excluded if offered only to show that the statements were made, since such evidence would be irrelevant to the issues in controversy.

Accepting Respondent's argument that the testimony was only offered to show that the statements were made, as Complainant argues, this testimony was not relevant to the issues in controversy. Therefore, the Administrative Law Judge did not commit error in excluding the testimony. Accordingly, this exception is without merit.

Respondent's Motion to File Additional Evidence

On April 29, 1981, Respondent filed a motion to have additional evidence made a part of the record. The evidence which Respondent contends should be made a part of the record is a stipulation of dismissal of a civil lawsuit filed by the State of Alaska against Respondent seeking an injunction and other remedies. According to Respondent, since this lawsuit was referred to at the hearing before the Administrative Law Judge, it may have affected his decision, and therefore, the stipulation of dismissal should be made a part of the record. Respondent further requests that in the event the Judicial Officer does not reverse the decision of the Administrative Law Judge and dismiss the Complaint, that he remand the case for a hearing de novo based on the attached stipulation and other prejudicial errors set forth in Respondent's brief on appeal.

While the stipulation of dismissal before the court will be retained as part of the record, it does not serve as a basis for remanding the appeal. There is no indication that the Administrative Law Judge's decision was affected by the knowledge of the pendency of the civil action. In addition, the court dismissal provides no basis for holding a further hearing. Accordingly, Respondent's motion, to the extent it requests remand of this proceeding, is denied.

CONCLUSION

After consideration of the entire record and Respondent's exceptions and arguments, it is concluded that Respondent is engaged in a scheme for obtaining money through the mail by means of materially false representations. Accordingly, Respondent's appeal is denied. A remedial order under 39 U.S.C. § 3005 is being issued contemporaneously with this Decision.