In the Matter of the Complaint Against:

DENNIS WARD, et al.,
P.O. Box 25, at Byron,
CA 94514-0025, etc.

P.S. Docket No. 37/118

10/16/91

Cohen, James A., Judicial Officer

APPEARANCE FOR COMPLAINANT: Elizabeth P. Martin, Esq.,
Law Department, United States Postal Service, Washington, DC 20260-1144

APPEARANCE FOR RESPONDENT: William H. Russell, Esq.,
Suite 505, 4 West Fourth Avenue, San Mateo, CA 94402-1615

POSTAL SERVICE DECISION ON BREACH OF CONSENT AGREEMENT

Complainant has filed a Petition alleging that Respondent Dennis Ward has breached the terms of a Consent Agreement (hereafter Agreement) executed on May 2, 1991, by continuing to solicit subscription renewals which he agreed to discontinue. The name and address to which Respondent currently seeks remittances, and against which Complainant sought the issuance of an interim detention order and now seeks the issuance of a false representation order, is Subscriptions Unlimited, 5757 Westheimer #3-367, Houston, TX 77057-5721.

On the basis of the information contained in the Petition and the exhibits attached thereto, an interim detention order as authorized by paragraph 4(c) of the Agreement was issued directing the detention of mail to the above name and address. Since Respondent has not requested a hearing under paragraph 4(e) of the Agreement, nor shown the existence of any genuine issue of material fact constituting good cause for a hearing to be held, this matter is being decided on the record. WDAAS, P.S. Docket No. 34/60 at 2 (P.S.D. Nov. 30, 1990); Damian Hawkins, P.S. Docket No. 25/167 at 3 (P.S.D. May 22, 1987). See also United States v. Cheramie Bo-Truc #5 Inc., 538 F.2d 696, 698-99 (5th Cir. 1976).

Findings of Fact

1. On May 2, 1991, Respondent executed the Agreement in consideration of Complainant's offer to move to suspend further administrative proceedings under the postal false representation statute, 39 U.S.C. § 3005 (See Agreement).

2. By the terms of the Agreement, Respondent agreed that the Order to Cease and Desist attached to the Agreement could be issued and that he would "refrain from violating the Order under any names, through any corporation or through any other device" (Agreement, PP2 & 3).

3. The Order attached to the Agreement was issued on May 10, 1991, as Cease and Desist Order No. CD-3166. The Order directs Respondent to cease and desist from:

"(1) Falsely representing, expressly or impliedly, in substance and effect, whether by affirmative statements or omissions that:

(a) the addressee has a previous account with the Respondent, (unless such is the case);

(b) the amount set forth on the face of the invoice is due and owing;

(c) Respondent is associated in any way with the periodical identified in the solicitation;

* * *

(2) Sending mailings that violate the provisions of 39 U.S.C. § 3001(d) and/or § 123.41 of the Domestic Mail Manual (DMM);

(3) Sending an invoice, bill, or statement of account owing and due to any person, firm or organization unless the recipient has previously agreed to pay for the merchandise or service covered by such invoice, bill, or statement."

4. Subsequent to the execution of the Agreement, certain subscribers to the publication MacWorld received through the mail a subscription renewal notice from Subscriptions Unlimited, 5757 Westheimer, #3-367, Houston, TX 77057 (Declaration of Juliana Nedd (Declaration) PP8-12; Declaration Exhibits (Exhs.) 4, 5, & 6). The subscribers believed that they had received a bill or invoice, but suspecting that it was not a legitimate renewal notice for MacWorld, contacted MacWorld to obtain clarification (Declaration Exhs. 4-6).

5. The renewal notice received by MacWorld subscribers is similar in format and text to one of the solicitations attached to the Complaint (Complaint Exh. 1) and similar only in text to the others (Complaint Exhs. 2-4). Respondent's current solicitation in format and text reasonably could be interpreted or construed as a bill, invoice or statement of account due and does not contain the disclaimers required by 39 U.S.C. § 3001(d) and/or DMM $S123.41 (Declaration Exhs. 4(b)-(d), 5(b)-(c) & 6(b)-(d)).

6. The current solicitation addresses the recipient as "DEAR SUBSCRIBER" and in bold print states "WE THANK YOU IN ADVANCE FOR TAKING CARE OF THIS," followed by the statement, in somewhat smaller but also bold print, "IF YOU DO NOT WANT TO RENEW, PLEASE DISREGARD." In the upper left corner of the solicitation is the word "MACWORLD" under which is listed the following subscription periods and prices:

   12 ISSUES - $30.00
   24 ISSUES - $60.00
   36 ISSUES - $90.00

CIRCLE TERM PREFERRED"

The solicitation also contains a "SUBSCRIBER NO.," requires the subscriber to "RESPOND BY" a certain date, and directs subscribers to "MAKE CHECKS TO: SUBSCRIPTIONS UNLIMITED, 5757 WESTHEIMER #3-367, HOUSTON, TX 77057" (Declaration Exhs. 4(b)-(d), 5(b)-(c) & 6(b)-(d)). The solicitation also includes a detachable "SUBSCRIBER['S] COPY" to be retained for the subscriber's records which contains the word "MACWORLD", states that something is "DUE ON" a specified date, and uses the words "AMT SENT," followed by the subscriber number and directions to "MAKE CHECKS TO: SUBSCRIPTIONS UNLIMITED" (Id.).

7. The Westheimer address currently used by Subscriptions Unlimited is the address of a commercial mail receiving agency which forwards mail addressed to Subscriptions Unlimited to P.O. Box 755, Brentwood, CA 94513 (Declaration, #3 & 5; Declaration Exh. 2).

8. Post Office Box 755 is assigned to Dennis and Pat Ward and Coastal Publishing (Declaration, #6; Declaration Exh. 3).

9. Subscriptions Unlimited is not affiliated with the publisher of MacWorld nor authorized to solicit subscription renewals on its behalf (Declaration, #13; Declaration Exh. 7).

Discussion

Complainant alleges that Respondent has breached the terms of the Agreement by distributing solicitations which violate the provisions of paragraphs 1(a)-(c), 2 and 3 of Cease and Desist Order No. CD-3166. In response to Complainant's Petition, Respondent contends that his new solicitation does not breach the terms of the Agreement since it offers the customer an option to accept or reject the offered subscription, is neither in the form of nor states that it is a bill, invoice or statement of account due, and does not expressly state that the addressee has a previous account with Subscriptions Unlimited, that Subscriptions Unlimited is affiliated with MacWorld, or that an amount is due Subscriptions Unlimited. Finally, Respondent contends that the solicitation does not mislead individuals into believing that it is from the publishers of MacWorld since two of its recipients realized on receipt and examination that it was not from MacWorld.

The issue to be decided in this proceeding is whether Respondent is continuing to make the representations which he agreed to discontinue. See Mark Eden v. Lee, 433 F.2d 1077, 1082-83 (9th Cir. 1970); American Consumer, Inc. v. U.S.P.S., 427 F. Supp. 589, 591 (E.D. Penn. 1977); Associated Writer's Guild of America, P.S. Docket No. 12/180 at 8 (P.S.D. June 6, 1990). It is undisputed that subsequent to the execution of the Agreement Respondent distributed a solicitation seeking remittances through the mail using the name Subscriptions Unlimited. The issue on which the parties disagree is whether Respondent's solicitation makes the representations prohibited by paragraphs 1(a)-(c), 2 & 3 of Cease and Desist Order No. CD-3166.

Although Respondent claims that his solicitation makes no express representations in violation of the Agreement, the reasonable implication and overall impression created by the text and format of his solicitation must be considered in determining whether the prohibited representations are continuing to be made. See N. Van Dyne Advertising Agency, Inc. v. U.S.P.S., 371 F. Supp. 1373, 1376 (S.D.N.Y. 1974); Vibra Brush Corp. v. Schaffer, 152 F. Supp. 461, 465 (S.D.N.Y. 1957), rev'd on other grounds, 256 F.2d 681 (2d Cir. 1958); Walter Head, P.S. Docket No. 15/123 at 4 (P.S.D. Oct. 10, 1984). Consequently, Respondent's solicitation must be considered as a whole and its meaning determined in light of the probable impact it would have on an ordinary recipient. See Donaldson v. Read Magazine, Inc., 333 U.S. 178, 189 (1948); G.J. Howard Co. v. Cassidy, 162 F.Supp. 568, 572 (E.D.N.Y. 1958); Gottlieb v. Schaffer, 141 F. Supp., 7, 15-16 (S.D.N.Y. 1956).

A review of Respondent's solicitation supports Complainant's allegation that it violates the provisions of 39 U.S.C. § 3001(d) and/or § 123.41 of the DMM, and that it makes the representations prohibited by paragraphs 1(a)-(c) of the Cease and Desist Order. Respondent's solicitation is in the form of, and reasonably could be construed as, a bill, invoice, or statement of account due in violation of 39 U.S.C. § 3001(d) and/or DMM § 123.41,n1 even though the words "bill, invoice or statement" do not appear on the face of the solicitation. The format together with the text of the solicitation which refers to the recipient as a subscriber, includes a subscription number, uses the word "renew" and contains a listing of prices for a term of issues, a payment due date and the statement "WE THANK YOU IN ADVANCE FOR TAKING CARE OF THIS," would most probably lead the ordinary recipient to believe that payment for his or her subscription renewal is currently due and owing. The direction for the addressee to make checks payable to Subscriptions Unlimited implies to the recipient that Subscriptions Unlimited is in some way affiliated with MacWorld, the only publication name appearing on the solicitation, and that the recipient has an account with Subscriptions Unlimited.

n1 The disclaimers required by 39 U.S.C. § 3001(d) and/or DMM § 123.41 are not contained in Respondent's solicitation.

Since Respondent is not authorized by MacWorld to solicit its renewal subscriptions, Respondent's representations that recipients of his solicitation have an account with Subscriptions Unlimited, that an amount is due and owing Subscriptions Unlimited and that Subscriptions Unlimited is affiliated with MacWorld are a continuation of the representations Respondent agreed to discontinue. The option to disregard the solicitation if the recipient does not wish to renew the subscription does not detract from this conclusion. Rather, it reinforces the notion that the solicitation is a bill for renewal which, if not paid, will result in the nonrenewal of an existing subscription for MacWorld.

Finally, contrary to Respondent's contention, the fact that the solicitation failed to deceive some recipients is insufficient to establish that the solicitation does not make the representations Respondent agreed to discontinue. n2 While recipients of Respondent's solicitation suspected that it was not a legitimate renewal notice from MacWorld, they nevertheless were not certain and sought clarification before making payment. A representation which is susceptible of more than one interpretation is misleading if one of those interpretations is false. See United States v. 95 Barrels of Vinegar, 265 U.S. 438, 442 (1924); Rhodes Pharmacal Co. v. F.T.C., 208 F.2d 382, 387 (7th Cir. 1953), modified on other grounds, 348 U.S. 940 (1954); National Scholastic Resources Admin., Inc., P.S. Docket No. 35/140 at 14-15 (P.S.D. November 23, 1990); The Robertson-Taylor Co., P.S. 16/98-102, 120 & 121 at 15 (P.S.D. March 31, 1986). Moreover, it is unnecessary to find that all or even a majority of readers would likely be deceived in order to find a violation of the false representation statute or a cease and desist order. See Mid-America Mktg., Inc., P.S. Docket No. 24/12 at 5 (P.S.D. May 7, 1987); Oriental Nurseries, Inc., P.S. Docket No. 9/116 at 5 (P.S.D. May 19, 1981). Rather, a solicitation is misleading if ordinary readers, including the gullible, naive and less critical, would most probably interpret the solicitation as making a false representation. See Leo Daboub, P.S. Docket No. 19/185 at 9 (P.S.D. July 10, 1986). See also Fields v. Hannegan, 162 F.2d 17, 18 (D.C. Cir. 1947), cert. den. 332 U.S. 773 (1947); Gottlieb v. Schaffer, 141 F. Supp. at 16. Since Respondent's solicitation is likely to deceive ordinary recipients into believing that it was a bill from MacWorld, the solicitation makes the false representations prohibited by Cease and Desist Order No. CD-3166. See Montgomery Ward & Co. v. F.T.C., 379 F.2d 666, 670 (7th Cir. 1967); Rhodes Pharmacal Co., 208 F.2d at 387; Mid-America Mktg., Inc., at 5.

n2 Although recipients questioned whether the solicitation was sent by the publisher of MacWorld, they believed it was a bill or invoice for renewal of their subscription to that publication (Declaration Exhs. 4-6).

Respondent does not allege nor has he established that recipients of his solicitation have previously agreed to pay for the merchandise covered by his solicitation. Therefore, Respondent has violated paragraph 3 of the Cease and Desist Order which prohibits Respondent from "sending an invoice, bill or statement of account owing and due" without the recipient first agreeing to pay for the subscription covered by the invoice, bill or statement.

Conclusion

The record establishes that Respondent has breached the terms of the Agreement in the manner alleged in the Petition. Accordingly, pursuant to paragraph 4(b) of the Agreement, a false representation order, as described in 39 U.S.C. § 3005 should be issued. As authorized by paragraph 4(f) of the Agreement, the false representation order will be issued thirty days from the date of this Decision unless the Judicial Officer is notified in writing that judicial review of this Decision has been sought in a United States District Court.