In the Matter of the Complaint Against:

SHELDON LEWENFUS,
5460 White Oak Avenue #A377,
Encino, CA 91316-2407;

HEALTH INTERNATIONAL,
19528 Ventura Blvd. #242,
Tarzana, CA 91356-2917

P.S. Docket No. 30/159

Cohen, James A.; Judicial Officer

APPEARANCES FOR COMPLAINANT:
Geoffrey A. Drucker, Esq.;
Larry L. Larson, Esq.,
Consumer Protection Division,
Law Department,
United States Postal Service,
Washington, DC 20260-1144

APPEARANCE FOR RESPONDENTS:
Sheldon S. Lustigman, Esq.,
Ballon, Stoll & Itzler,
1450 Broadway,
New York, NY 10018-2201

POSTAL SERVICE DECISION ON REQUEST TO SET ASIDE DEFAULT REFERRAL

Respondents have requested that the Order issued by the Chief Administrative Law Judge finding Respondents in default and referring this matter to the Judicial Officer for appropriate action be vacated and that they be permitted to present their defense to the allegations of the Complaint. The Order of the Chief Administrative Law Judge was issued because Respondents failed to file their Answer to the Complaint within the fifteen-day period provided in the Notice of Answer and Hearing issued pursuant to the Rules of Practice in Proceedings Relative to False Representation and Lottery Orders, 39 C.F.R. Part 952.

Background and Findings of Fact

On June 22, 1988, a Complaint was filed alleging that Respondents Sheldon Lewenfus and Health International were engaged in conducting a scheme or device for obtaining money or property through the mail by means of materially false representations in violation of 39 U.S.C. 3005. On June 23, 1988, the Complaint and Notice of Answer and Hearing were sent to the postmaster at Van Nuys, California 91409-9998, and at Tarzana, California 91356-9998, for service on Respondents Lewenfus and Health International. (Memo., Asst. Recorder to Postmasters dated June 23, 1988). The Notice of Answer and Hearing advised Respondents that under the Rules of Practice the Answer must be filed not later than fifteen days after the date of receipt of the Notice and Complaint.

The documents addressed to Respondent Lewenfus were placed in P. O. Box 16416, Encino, California 91416 at 10:15 a.m. on July 7, 1988. (Statement of Don Luke, U.S.P.S., Van Nuys, CA). Although the address for Respondent Lewenfus in the Complaint was listed as 5460 White Oak Avenue #A377, Encino, California 91316-2407, as of late 1987 the Postal Service had been instructed to forward Respondent Lewenfus' mail to the post office box address. (P.S. Form 1093; P.S. Form 3982; P.S. Central Forwarding System Print-Out).

With respect to service of process on Respondent Health International, the Notice and Complaint were delivered on June 27, 1988, to 19528 Ventura Blvd. #242, Tarzana, California 91356-2917, the address to which remittances were sought in Respondents' advertising. (Comp. Exh. 1, p. 12). This Ventura Boulevard address is a mail receiving service. (Memo., M. D. Valentino, U.S.P.S., Tarzana, CA, dated June 27, 1988). Harriet Latta, an agent of Health International and an employee of the mail receiving service, signed for the Notice and Complaint addressed to Health International. (Id.; P.S. Form 3849-A dated June 27, 1988).

As of July 27, 1988, the Answer had not been filed. On that date Complainant filed a Motion for Default Judgment. On August 4, 1988, the Chief Administrative Law Judge issued an Order finding Respondents in default and referring the matter to the Judicial Officer for appropriate action.

On August 4, 1988, the parties initiated a telephone conference with the Judicial Officer to present their positions with respect to the issuance of the Default Order by the Chief Administrative Law Judge. After presentation of the arguments of the parties, it was concluded that proper service of the Complaint had been made on Respondent Health International and that a Default Order should be issued. (Order and Memo. of Telephone Conf. dated Aug. 5, 1988). By Order dated August 5, 1988, False Representation Order No. 88-64 was issued against Respondent Health International. The return portion of the Order was stayed pending a ruling on whether Respondent Lewenfus was in default. As had been agreed in the August 4, 1988, telephone conference, the parties thereafter filed their respective positions with regard to service on Respondent Lewenfus.

Discussion and Conclusion

Respondents argue that the issuance of the Order by the Chief Administrative Law Judge referring the matter to the Judicial Officer was not justified since proper service of the Complaint was not made on either Respondent. Respondents further request that their failure to file a timely Answer be excused since they have a meritorious defense to the allegations in the Complaint and were only "a few days late" in expressing their desire to "litigate this case."

Respondents' first contention regarding improper service is rejected with regard to Respondent Lewenfus because the record establishes that proper service of the Complaint was obtained on July 7, 1988. Respondents argue that proper service was not accomplished because the Complaint was left in a post office box rented for nonbusiness use. The Rules of Practice provide, however, that if the postmaster or his agent is unable to personally deliver a copy of the Notice and Complaint, the documents may be delivered by regular mail. See 39 C.F.R. 952.8(b); ViAids Laboratories, Inc. v. United States Postal Service, 464 F. Supp. 976, 981 n.8 (S.D.N.Y. 1979) (service by regular mail sufficient under 39 C.F.R. 952). The placement of the envelope in Respondent Lewenfus' post office box therefore constitutes proper service on Respondent Lewenfus.

Respondent Lewenfus' additional assertion that a Complaint relating to his business activity cannot be properly served at a nonbusiness address is erroneous. The Rules of Practice provide for service at any office or address of a Respondent. See 39 C.F.R. 952.8(a).

Proper service of process was also made on Respondent Health International. The Rules of Practice provide that the Complaint shall be delivered to the Respondent "or his agent." Id. Respondent Lewenfus contends, however, that he never authorized Ms. Latta, an employee at Respondent Health International's mail receiving service, to accept certified mail for Health International. Nonetheless, since the mail receiving service was authorized by Respondent Lewenfus to receive mail, the mail receiving service had implied authority to receive certified mail for Respondents. See Runkle v. Burnham, 153 U.S. 216, 226-27 (1894) (implied authority includes authority to do whatever acts are necessary, usual and proper to accomplish the main authority expressly delegated to the agent). Moreover, since Respondent Health International held itself out to receive remittances at the address of the mail receiving service, delivery of the Notice and Complaint at that address would constitute proper service under the Rules of Practice. See 39 C.F.R. 952.5, 952.8. Thus, service was made on Respondent Health International by delivering the documents to Ms. Latta, Respondent's agent, on June 27, 1988.

Respondents' contention that they should be excused because they were only "a few days late" in filing an Answer is rejected as being factually erroneous. Respondents' counsel first made this assertion on August 4, 1988, thirteen days after the Answer was due. Even if Respondents had only been "a few days late," Respondents would have been held to be in default absent a showing of good cause for their failure to file a timely Answer. See ViAids Laboratories, Inc., supra, at 979, 982 (a request for an extension of time to file an Answer was denied where Respondent made the request one day after the Answer was due but failed to give a credible excuse for his tardiness).

Moreover, Respondents' assertion that a meritorious defense exists is insufficient to support a revocation of the Default Order since it has been determined that the Complaint had been properly served on Respondents and no excusable cause has been shown for the failure to file a timely Answer. See Robinson v. Bantam Books, Inc., 49 F.R.D. 139, 140-41 (S.D.N.Y. 1970); Nelson v. Coleman Co., 41 F.R.D. 7, 9-10 (D.S.C. 1966); Ritz, Division of MVCO, Inc., P.S. Docket No. 12/174 (P.S.D. Jan. 26, 1982, at 2).

For the foregoing reasons, Respondents' request to set aside the Default Referral is denied and both Respondents Lewenfus and Health International are found to be in default. Accordingly, the stay of the return portion of False Representation Order No. 88-64 is vacated and the Order is placed in full force and effect. The Cease and Desist Order requested in the Complaint is issued against Respondent Lewenfus.