In the Matter of the Complaint Against:

ASSOCIATED WRITERS GUILD OF AMERICA and AWG,
P. O. Box 49204,
Atlanta, GA 30359-1204,
3104 Briarcliff Road, N.E.,
Atlanta, GA 30329-2603
and
NORTH AMERICAN DATA VERIFICATION AND TESTING SERVICE, INC.,
P. O. Box 49364,
Atlanta, GA 30359-1364

P.S. Docket No. 12/180

Finn, James D., Jr., Associate Judicial Officer

APPEARANCES FOR RESPONDENTS: Michael C. Ford, Esq., Ford &
Ford, P.C., Dunwoody Place - Suite B, 1841 Peeler Road, Atlanta, GA
30338-5704; Bruce S. Harvey, Esq., 54 Ellis Street, N.E., Suite
350, Atlanta, GA 30303-2421

APPEARANCE FOR COMPLAINANT: Geoffrey A. Drucker, Esq., Consumer Protection Division, Law Department, United States Postal Service, Washington, DC 20260-1100

POSTAL SERVICE DECISION ON BREACH OF CONSENT AGREEMENT

On April 30, 1990, Complainant, the United States Postal Service, filed a "Petition For Orders Based Upon Breach of Consent Agreement" in which it alleged that Respondents had breached the terms of a Consent Agreement executed on April 29, 1982 n1 by Walter LeRoy Moody as the authorized agent and president of Respondent Associated Writers Guild of America and Respondent North American Data Verification and Testing Service, Inc. Complainant contends in its Petition that Respondents have resumed the activities which they agreed to discontinue. Specifically, Complainant alleges that Respondents are conducting a work-at-home scheme which violates two subparagraphs of paragraph 3 of the Consent Agreement. The specific allegations of the Petition are contained in the Findings of Fact, infra.

nl In executing the Agreement Respondents wrote "April 29, 1981," opposite the signature line. However, the 1981 date was clearly erroneous as all other evidence in the record conclusively establishes the year as 1982.

In the Petition, Complainant sought the issuance of a temporary detention order against mail addressed to Associated Writers Guild of America, Inc., P. O. Box 161189, Atlanta, Georgia 30321-1189 and North American Data Verification and Testing Service, Inc., P. O. Box 1114, Forest Park, Georgia 30051-1114. On the basis of the information and documents contained in the Petition a temporary detention order was issued on April 30, 1990. The order authorized the temporary detention of the mail and granted Respondents ten days in which to respond to the Petition. Respondents' Answer, seeking dismissal of the Petition and requesting a hearing in Atlanta, Georgia, thereafter was filed by Respondents.

Respondents' Answer has not raised any material issues of fact which require resolution by hearing. Accordingly, the Associate Judicial Officer has determined that Respondents have not established, as required by the Consent Agreement, good cause for a hearing, and denies Respondents' request for one. The matter therefore will be decided on the written record as it presently exists.

FINDINGS OF FACT

1. On April 29, 1982, Walter LeRoy Moody, as authorized agent and president, executed a Consent Agreement ("The Agreement") on behalf of Respondents, Associated Writers Guild of America, Inc. and North American Data Verification and Testing Service, Inc. The Agreement was also signed by Respondents' counsel, Postal Service counsel, and one witness. Under the terms of paragraph 3 of The Agreement Respondents agreed that if they continued the Associated Writers Guild of America, Inc. enterprise that the following guidelines would apply:

3. ...Respondents shall neither make nor have cause to be made any representations, statements, or the like, expressly or implicitly, in advertisements, literature, material, pamphlets, information sheets, question and answer sheets, responses to queries, presentations, follow-up sheets or by any other written or oral means (hereinafter collectively referred to as "material") that would lead one to believe or could be reasonably calculated to lead one to believe that Respondents offer job opportunities, job description, job conditions or wages, earnings or salaries that are in conflict with the guidelines established in subsections (a) through (e) of this paragraph, below:

(a) Expression of amount of work, by its tone, language, and spirit, shall be aligned with Respondents' then-existing job needs in the particular geographic area in which the material is being circulated and exposed;

* * * * *

(e) Respondents' representations respecting the terms and conduct of its Associated Writers Guild of America, Inc., membership enterprise shall be, at the time made, factually true.

2. The Agreement also provided that in the event of breach of The Agreement the Judicial Officer (including Associate Judicial Officer) may issue an order of the type described in 39 U.S.C. § 3005, as well as any interim order.

3. Complainant's Petition alleges that Respondents conduct a work-at-home scheme which violates the guidelines of paragraphs 3(a) and (e) of the Consent Agreement. Respondents contest these allegations.

4. Subsequent to the execution of The Agreement Respondents continued to operate their businesses using the same names and in the manner described below. Records obtained by Complainant from the State of Georgia show North American Data Verification Testing Service, Inc. to be a domestic profit corporation. Roy Moody is listed as "CEO," while Susan McBride is the "SEC." Associated Writers Guild of America's records show Susan McBride as "SEC." Ms. McBride's name is contained on post office box applications for both firms, while Mr. Moody's name is also contained on North American's. Respondents initiate contact with the public in furtherance of their scheme by placing small advertisements in newspapers. The advertisements offer wages of $7.75 per hour for work-at-home, consisting of evaluating and responding to daily work reports. Response by mail to "AWGA" at an Atlanta, Georgia, post office box is requested. AWGA stands for Associated Writers Guild of America (Complainant's Exhibits (CX) C-l, 18-20, D, D-1, D-2).

5. Those responding to the advertisement receive a letter from Respondent, Associated Writers Guild of America ("the Guild"), advising that the positions of field agent supervisor and preliminary proofreader are available. Enclosed with the letter is an application for employment and question and answer sheets which describe the duties of each of the two positions. A recipient is advised that if the employment application is approved he or she will have to take an at-home test to determine ability and willingness to complete a training program (CX C-1, 3).

6. The question and answer sheets state that the Guild is a non-profit organization which publishes an anthology entitled Authors to Watch. Upon joining the Guild (for $35.00 (CX C-1, 12)) a member is entitled to submit material ("a paper of acceptable length") for publication in Authors to Watch. All material submitted is published unless "offensive or obscene." Each issue of Authors to Watch contains approximately 120 pages. New issues are published as soon as sufficient new material is assembled. It is represented that "field agents" are utilized to recruit new members (CX-1, 3). The record does not indicate whether Respondents employ any field agents.

7. Duties of preliminary proofreaders are described in the question and answer sheets. Preliminary proofreaders are trained "to detect obvious deficiencies" which would render a Guild member's material unsuitable for publication. They either return a member's material for correction or refer acceptable papers to final proofreaders. They are required to take a two-part at-home training program. Upon completion of part one of the program they are promised payment of $40. Thereafter, they are paid the preliminary proofreader hourly rate. A proofreader has no predetermined number of hours to work each week, but is advised that the Guild is not interested in training someone not able to work an average of ten hours per week. The average time to proofread one article is represented to be one hour. Proofreaders may supplement their income by recruiting new Guild members and are advised that part one of the training program includes recruitment training. In order to qualify for proofreader training an applicant is instructed to send $25 to Respondent, North American Data Verification and Testing Service, Inc. (North American) to obtain a motivation and aptitude test, which an applicant must pass with a score of 70 or higher (CX C-1, 3).

8. Duties of field agent supervisors are also described in the question and answer sheets. The supervisor must each day evaluate 5 daily reports submitted by each field agent assigned to the supervisor. The supervisor submits field agent progress reports to the Guild at the end of each two week period. A supervisor applicant is advised that an agent's daily reports can be processed in approximately one hour. Supervisors are to designate the number of hours they wish to work each week and the Guild agrees to assign agents to the supervisor to meet the work load requirement sought. Supervisors undergo a two-part training period similar to proofreaders (including recruitment training). Supervisor applicants must also pass a motivation and aptitude test given by North American for a $25 fee (CX C-1, 3).

9. Applicants who fill out and return the employment application receive a letter from the Guild which states the application has been approved and instructs the applicant to send $25 to North American and obtain a motivation and aptitude test (CX C-1, 5).

10. Upon taking the test applicants return it to North American for scoring. Shortly thereafter applicants receive a mailing from the Guild with two enclosures -- (1) a card indicating the test grade was an "A" and (2) a congratulatory letter accepting the applicant into the training program. The applicant is advised that the training material may be purchased for $8.99, or borrowed from the Guild (postage and insurance cost to applicant approximately $4.00) (CX C-1, 9, 10).

11. The part one training program for preliminary proofreaders or supervisors contains little, if any, specific training information pertaining to the two positions. The proofreaders training program contains five paragraphs of advice on having the proper work attitude and advises the trainee to read books written by W. Clements Stone and Norman Vincent Peale. Six additional paragraphs are devoted to goal setting. The remainder of the training program (7 l/2 pages) gives detailed information on how to recruit new Guild members. In order to complete the part one training program four new members must be recruited. The supervisors training program is almost identical to the preliminary proofreaders program (CX C-1, 11, 12, 20).

12. Since 198l the Guild has published ten editions of Authors to Watch, four since 1986. Each edition approximately 130 pages and contained was from 18 to 51 different articles (CX C-1, 21, 22). The Guild has between 200-500 members (CX C-1, 20, D, D-3).

13. Approximately 5000 individuals apply to the Guild each year to become proofreaders. Each proofreader under contract with the Guild receives approximately ten stories per year to proofread (CX C-1, 20).

DISCUSSION AND CONCLUSIONS

The issue to be decided in connection with a Petition for Breach of a Consent Agreement is whether the party signing the agreement has breached its terms by continuing to make the representations which it agreed to discontinue. The determination of the truth or falsity of the representations is generally not in issue. Mark Eden v. Lee, 433 F.2d 1077 (9th Cir. 1970); Nancy Pryor, Inc. v. United States Postal Service, Civil Action No. 80-1933 (D.D.C. 1981); American Consumer, Inc. v. United States Postal Service, 427 F. Supp. 589 (E.D. Pa. 1977). In this matter falsity is in issue, as the agreed upon guidelines of the Consent Agreement pertain to falsity.

In interpreting advertising representations the probable impact of the advertisement upon ordinary minds is the test to be applied. The impression of advertising on the ordinary mind may be determined by the trier of fact solely on the basis of the advertising itself. Vibra Brush Corp. v. Schaffer, 152 F. Supp. 461, 468 (S.D.N.Y. 1957), rev'd on other grounds 256 F.2d 681 (2d Cir. 1958); Associated Telephone Directory Publishers, Inc., P.S. Docket No. 13/191 (P.S.D. Jan. 25, 1984). Deception may be present in advertisements when they contain untrue statements or when statements which ought to be contained are omitted. In considering the interpretation which ought to be given to advertising claims, the reasonable implications arising from the claims are to be given weight as well as those claims which are stated expressly. Donaldson v. Read Magazine, Inc., 333 U.S. 178 (1948); Spiegel, Inc. v. F.T.C., 411 F.2d 481 (7th Cir. 1969); Baslee Products Corp. v. United States Postal Service, 356 F. Supp. 841 (D.N.J. 1973); Vibra Brush Corp. v. Schaffer, supra. Applying these principles to Respondents' advertising materials, it is concluded that Respondents have breached The Agreement.

Complainant's initial allegation of breach of The Agreement by Respondents is that, contrary to paragraph 3(a) of The Agreement, supra, Respondents expression of the amount of work to be performed by selected applicants is not aligned with its job needs in the area solicited. In this regard Complainant contends Respondents misrepresent the amount of work available in all areas of the country. The second allegation of breach states that, contrary to paragraph 3(e) of The Agreement, supra, Respondents representations respecting the terms and conduct of the Guild enterprise are untrue.

A reading of the advertisement and materials supplied to applicants, as well as copies of depositions in the record, supports the two allegations of breach. Respondents indeed misrepresent the amount of work available to applicants. Those seeking proofreader positions are advised that the Guild is not interested in training them if they are not able to work an average of ten hours per week. Implicit in that statement is the promise to provide proofreaders with ten hours of work per week at the rate of $7.75 per hour, thus providing proofreader applicants incentive to make the financial investments required to take the motivation and aptitude test and training program. In fact ten hours of proofreading work per week are not given to proofreaders. Rather, at most, they receive ten hours of work per year.

Supervisor applicants are likewise promised a certain amount of work per week. Those applicants are instructed to designate the number of hours they wish to work each week processing field agent reports. The Guild specifically agrees to assign sufficient field agents to meet the work hour requirement of the supervisor. Again, substantial incentive is provided to expend the funds necessary to become a supervisor. There is no evidence in the record however that Respondents actually employ field agents. Without field agents to supervise, the supervisors would have no work to perform. In any event, the number of Guild members recruited by the alleged field agents (200-500) would provide sufficient work for one supervisor only for a period of 20 weeks.

STn2 Each supervisor must evaluate at least 5 daily field reports, or 25 per week. Assuming 500 new members were recruited in a year one supervisor could evaluate all 500 reports pertaining to the new members in 20 weeks.Complainant alleged in detail the conspicuous absence of field agents in Respondents' promotion. Respondents' Answer merely stated "The Respondents advertise for Field Agents." No affidavits or other documents were offered in support of this statement. Respondents, thus, misrepresent the amount of work available to proofreader and field supervisor applicants. In so doing they have breached paragraph 3(a) of The Agreement.

Respondents likewise have breached paragraph 3(e) of The Agreement. By breaching paragraph 3(a) of The Agreement, misrepresenting the amount of work available to applicants,

Respondents made untrue representations as to the terms and conduct of the Guild membership enterprise.

In countering the breach allegations Respondents, besides denying the breach, allege that the Consent Agreement in issue was never executed by Respondents and that Complainant has not shown that North American breached any Agreement. Respondents attached a different unexecuted copy of a Consent Agreement to its Answer and alleged that Agreement was the one Respondents actually executed. Respondents' allegations and arguments have no merit. As stated, the Consent Agreement they rely upon as the genuine one is not signed. The Agreement in the record in this matter is signed by Respondents, Respondents' counsel, Postal Service counsel and one witness. Further, Respondents have offered no other support for their allegation. In regard to North American's culpability for breach the record clearly sustains a holding that North American is an integral part of Respondents' scheme.

In summation, Respondents are found to have breached paragraphs 3(a) and 3(e) of The Agreement. Pursuant to paragraph 9 of The Agreement, an Order under 39 U.S.C.$S3005 is being issued contemporaneously with this Decision.