In the Matter of the Complaint Against:

PROFESSIONAL OPPORTUNITY MAGAZINE, INC.,
7330 Bock Avenue,
Stanton, CA 90680-2117
and
MARSHA MACINTOSH, 7330 Bock Avenue,
Stanton, CA 90680-2117

P.S. Docket No. 33/55

Cohen, James A., Judicial Officer

APPEARANCE FOR COMPLAINANT: Jerry Belenker, Esq., Larry L.
Larson, Esq., Consumer Protection Division, United States Postal
Service, Law Department, Washington, DC 20260-1144

APPEARANCE FOR RESPONDENTS: Stanley Fleishman, Esq., Fleishman,
Fisher & Moest, 2049 Century Park East, Suite 3160, Los Angeles, CA
90067-3275

POSTAL SERVICE DECISION

The General Counsel of the United States Postal Service has filed an appeal from a Decision of an Administrative Law Judge dismissing a Complaint alleging that Respondents are 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.

BACKGROUND

The General Counsel (Complainant) initiated this proceeding by filing a Complaint alleging that Respondents solicit remittances through the mail by means of the following materially false representations:

"11 . . .

a - A company owes POM Inc. the amount listed on the statement; and

b - A company previously has authorized POM Inc. to print the company's announcement of a job opening."

Complainant also alleged that Respondents' solicitation could reasonably be construed as a bill, invoice, or statement of account due, but was nonmailable because it did not contain the disclaimer prescribed by 39 U.S.C. § 3001(d)(2)(A) or Domestic Mail Manual (DMM) § 123.41.

Respondents filed a timely Answer in which they denied that the solicitation attached to the Complaint was typical of those being used at the time the Complaint was filed or that any of their solicitations make the false representations alleged by Complainant. Respondents attached to their Answer a solicitation which they contend is currently being used and includes a disclaimer in compliance with both 39 U.S.C. § 3001(d)(2)(A) and DMM § 123.41. As affirmative defenses, Respondents alleged that Complainant knew that the solicitation attached to the Complaint was no longer being used, Respondents' solicitations are constitutionally protected commercial speech, Complainant's request for relief constitutes a prior restraint on speech prohibited by the First Amendment and the cease and desist order requested by Complainant is overbroad.

Subsequent to the filing of their Answer, Respondents filed a Motion for Summary Judgment in which they alleged that they were entitled to judgment as a matter of law because they had discontinued the use of the solicitation on which the Complaint was based and that the Postal Service's interpretation of 39 U.S.C. § 3005(a) violates the free speech and due process provisions of the First and Fifth Amendments to the Constitution. Complainant filed a timely Reply in which it denied that Respondents constitutional arguments or their discontinued use of the solicitation attached to the Complaint serves as a basis for granting the Motion for Summary Judgment.

The Administrative Law Judge issued a Decision granting the Motion for Summary Judgment and dismissing the Complaint. Complainant filed an appeal from the Administrative Law Judge's Decision n1 to which Respondents filed a timely reply. The issues raised on appeal are discussed hereafter.

n1 The Decision on Motion for Summary Judgment was issued without an accompanying notice of appeal rights which is normally issued with an Initial Decision. Since a decision on motion for summary judgment is a decision on the merits, a notice of appeal rights should have been issued with the Administrative Law Judge's Decision.

DISCUSSION

Complainant argues that the Rules of Practice do not provide for motions for summary judgment and the Administrative Law Judge exceeded his authority when he dismissed the Complaint on Respondents' motion. Complainant in addition argues that the Administrative Law Judge improperly placed on Complainant the burden to prove the existence of a cognizable danger of recurrent violation, whereas case law places this burden on Respondents. Complainant also contends that Respondents have not satisfied this burden and that a finding in Respondents' favor would not serve the public interest. Finally, Complainant argues that the Administrative Law Judge improperly made findings on the legality of Respondents' revised solicitation even though the solicitation was not before him, and no evidence had been presented.

In their reply, Respondents argue that the Administrative Law Judge has authority to "construe the law" and therefore, had authority to grant their Motion for Summary Judgment. Respondents appear to concede that the Administrative Law Judge placed the burden of establishing a cognizable danger of recurrent violation on Complainant, but contend that the Administrative Law Judge correctly concluded that no such danger exists. In the remainder of their reply, Respondents argue that their solicitations are constitutionally protected expressions of commercial speech and that § 3005(a) must be narrowly construed in order to avoid serious constitutional problems.

The Administrative Law Judge granted Respondents' Motion for Summary Judgment and dismissed the Complaint because Respondents had discontinued the use of the solicitations which were alleged to be in violation of 39 U.S.C. § 3005, and were no longer receiving remittances based on the discontinued solicitations. Further, the Administrative Law Judge found that the solicitation being used by Respondents at the time the Complaint was filed appeared to comply with both 39 U.S.C. § 3001(d)(2)(A) and the alternative notice set forth in DMM § 123.41, that Respondents do not have a past history of violating the Postal Service statute, and they have stated that they do not intend to resume the use of the discontinued solicitation.

The Rules of Practice in Proceedings Relative to False Representation and Lottery Orders, 39 C.F.R., Part 952, do not provide for summary disposition. Nonetheless, a hearing is not required and summary disposition is appropriate where it is clear there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. n2 Cf., United States Testing Aughority, P.S. Docket No. 14/77 at 8 (P.S.D. Oct. 2, 1985); F.R. Civ. P. 56(c). Summary disposition is not appropriate, however, where issues relating to motive, intent or state of mind are in dispute. See Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 473 (1962); KangaROOS U.S.A., Inc. v. Caldor, Inc., 778 F.2d 1571, 1577 (Fed. Cir. 1985).

n2 A hearing under such circumstances would serve no useful purpose and would be a waste of time and money for both the parties and the presiding officer.

In this proceeding, Respondents' motive and future intent to comply with the law are factual issues on which evidence may be presented to establish the danger of recurrent violation.

Respondents' past practice is also an issue of fact on which evidence should be taken. The abandonment of the practice and the promise that it will not be resumed are insufficient to show that there is no cognizable danger of recurrent violation without a showing of a change in circumstances which would make a resumption of the practice impractical or impossible. See County of Los Angeles v. Davis, 440 U.S. 625, 631-32 (1979); United States v. Concentrated Phosphate Export Assn. Inc., 393 U.S. 199, 203 (1968); United States v. Oregon State Medical Society, 343 U.S. 326, 333-34 (1951); Libbey-Owens-Ford Glass Co. v. FTC, 352 F.2d 415, 418 (6th Cir. 1965). Moreover, Respondents, not Complainant, bear a heavy burden to establish that there is no danger of recurrent violation. E.g., County of Los Angeles v. Davis, supra; United States v. W. T. Grant Co., 345 U.S. 629, 632-33 (1953); Official Airline Guides, Inc. v. FTC, 630 F.2d 920, 928 (D.C. Cir. 1980), cert. denied, 450 U.S. 917 (1981). Respondents have not satisfied their burden and have not shown that they are entitled to judgment as a matter of law.

It has consistently been held that proceedings under 39 U.S.C. § 3005 are not rendered moot because a scheme has been voluntarily discontinued prior to the filing of the Complaint. See, Paul W. Schuette, P.S. Docket No. 29/117 (P.S.D. March 16, 1989); CM/NA, Commission Mailers of North America, P.S. Docket No. 20/33 (P.S.D. Aug. 29, 1986); Electronic Development Lab, P.S. Docket No. 18/157 (P.S.D. Sept. 6, 1985), citing United States v. W. T. Grant Co., supra. As Respondents argue, § 3005(a) refers to persons engaged in conducting a scheme as opposed to those who have engaged in a scheme in the past. However, a narrow construction of this language as Respondents advocate would not serve the public interest and would be inconsistent with the purpose and intent of 39 U.S.C. § 3005, particularly as it was amended in 1983 to grant cease and desist authority to the Postal Service to prevent future violations. Id; P.L. 98-186, 97 Stat. 1315. Thus, Respondents' construction of 39 U.S.C. § 3005 is rejected and the uniform and continuous inter- pretation of the statute enunciated in Schuette, CM/NA, Commission Mailers of North America and Electronic Development Lab, supra. is affirmed.

Constitutional challenges to § 3005 similar to those presented by Respondents have previously been considered in both administrative and court proceedings and have been rejected. See Donaldson v. Read Magazine, Inc., 333 U.S. 178 (1948); United States Postal Service v. Athena Products, Ltd., 654 F.2d 362 (5th Cir. 1981); cert. denied, 456 U.S. 915 (1982); Original Cosmetics Products, Inc., v Strachan, 459 F. Supp. 496 (S.D.N.Y. 1978); aff'd 603 F.2d 214 (2d Cir); cert. denied, 444 U.S. 915 (1979); Health Care Products, Inc., P.S. Docket No. 28/90 (P.S.D. March 3, 1989); Contemporary Mission, Inc., P.S. Docket No. 8/159 (P.S.D. June 30, 1981); Athena Products, Ltd., P.S. Docket No. 7/99 (P.S.D. June 26, 1981); Wilmont Products, P.S. Docket No. 6/46 (P.S.D. July 19, 1979). The application of the statute to the facts of this case does not support a finding of a violation of Respondents' constitutional rights. (Id).

Finally, the Administrative Law Judge's conclusions with respect to Respondents new solicitation were premature since the parties had no opportunity to present evidence with respect to this solicitation. The representations made in the new solicitation, their falsity and the mailability of the new solicitation are issues on which the parties have a right to present evidence.

CONCLUSION

The Administrative Law Judge erred in granting Respondents' Motion for Summary Judgment because issues of material fact remain unresolved and Respondents have failed to show that they are entitled to judgment as a matter of law. Accordingly, Complainant's appeal is sustained, the Complaint is reinstated and the matter is remanded to the presiding Administrative Law Judge for further proceedings as are appropriate and consistent with this Decision.