In the Matter of the Complaint Against:                  )
Against:                                                                 )
                                                                               )
FINDERHOOD, INC.                                                 )
8 W. 36th Street                                                     )
New York, NY 10018-8083                                   )
                                                                               )
GEORGE FELDMAN                                                )
11 Old Colony Lane                                                )
Great Neck, NY 11023-1623                                  )
                                                                               )
GEOFFREY FELDMAN                                            )
11 Old Colony Lane                                                )
Great Neck, NY 11023-1623                                  )
                                                                               )
AWARDS DEPOT                                                   )
7040 W. Palmetto Park Road                                  )
Suite 500                                                                )
Boca Raton, FL 33433-3461                                  )
                                                                               )
WAREHOUSE DEPOT                                             )
527 Third Avenue, Suite 100                                 )
New York, NY 10016-4168                                   )
Attn: Shipping Dept.                                               )   P. S. Docket No. 34/102

Appearance for Complainant: Jennifer Y. Angelo, Esq. Consumer Protection Division Law Department United States Postal Service Washington, DC 20260-1144

Appearance for Respondents: Herbert Monte Levy, Esq. Suite 4210 60 East 42nd Street New York, NY 10165-0007

POSTAL SERVICE DECISION
ON MOTION FOR RECONSIDERATION

Respondents have filed a Motion for Reconsideration of the Postal Service Decision issued in this proceeding which holds that Respondents are engaged in a scheme or device for obtaining money through the mail by means of materially false representations, and that two of Respondents' solicitations constitute nonmailable matter in violation of 39 U.S.C. § 3001(d).^1/ Complainant opposes Respondents' motion.

Discussion

In support of their Motion for Reconsideration, Respondents make many of the same arguments which were previously considered and rejected in either the Initial or Postal Service Decision. While Respondents contend that certain findings and conclusions of the Initial Decision, as modified by the Postal Service Decision, are in error and certain provisions of Cease and Desist Order No. CD-3362 are improper and should be deleted, a review of Respondents' arguments on reconsideration does not establish that any error of fact or law has occurred or that the cease and desist order should be modified.

1. Applicability of Cease and Desist Order to George Feldman

Respondents first argue on reconsideration that Respondent George Feldman should not be included in Cease and Desist Order No. CD-3362 since he is no longer an officer of

Respondent Finderhood, Inc. (Finderhood). According to Respondents, Mr. Feldman's inclusion in the Order is a violation of his due process rights since it subjects him to liability for penalties of up to $10,000 a day ^2/ for Finderhood's violations of the Order even though he is no longer an officer of the corporation.

Respondent George Feldman was properly included in the cease and desist order because of his corporate position and involvement in the operation of Finderhood (see P.S.D., at 19-21). Contrary to Respondents' contentions, the inclusion of Mr. Feldman in the cease and desist order will not subject him to liability for the acts of the corporation if he has totally severed his relationship with the corporation and no longer participates in, or controls, its activities. There- fore, his continued inclusion in the cease and desist order does not subject him to liability for acts over which he has no control, or deprive him of property without due process of law. Accordingly, Respondents' contention on reconsideration that Respondent George Feldman should not be included in Cease and Desist Order No. CD-3362 has no merit.

2. Common Meaning of "Food Processor"

Respondents next contend that paragraph 3(e) of the cease and desist order prohibiting them from falsely representing that a "product is a 'food processor' as that term commonly is understood to mean, i.e an electric appliance" should be deleted from the Order. Respondents claim, as they did before the Administrative Law Judge and on appeal to the Judicial

Officer, that the term "food processor" commonly refers to a non-electric device, not just an electric appliance as was found in the Initial and Postal Service Decisions (I.D., at 10-11; P.S.D., at 7-9). In support of this contention, Respondents have attached to their motion advertisements which they contend demonstrate that the term food processor is used in commerce to refer to non-electric devices.

Generally, evidence will not be considered on reconsideration unless it has been previously admitted into the record or shown to be newly discovered or previously unavailable. However, Complainant has not objected to consideration of the evidence attached to Respondents' motion and has itself attached additional evidence to its response. Under these circumstances,the evidence attached to the parties' submissions will be considered in connection with Respondents' motion.

The additional evidence attached to Respondents' motion does not establish that the Postal Service Decision is in error or that any other grounds exist for granting reconsideration. The evidence presented to the Administrative Law Judge and relied on by the Judicial Officer in affirming the Administrative Law Judge's Initial Decision supports the conclusion that a food processor is commonly understood to be an electric appliance (P.S.D., at 7-9). While the advertisements attached to Respondents' motion refer to non-electric devices as food processors, they include a photograph of the product to avoid any confusion concerning the product being offered. Respondents' advertisement on the other hand contains no photograph and creates the impression that the product offered is an electric food processor. Even viewed most favorably to Respondents, the language of their solicita- tion, without a picture, is capable of more than one meaning and since one of those meanings is false, the solicitation is misleading (P.S.D., at 8). Accordingly, there is no merit to this contention.

3. Product Value

Respondents contend that paragraph 3(f) of the cease and desist order violates the due process clause and the First Amendment because it is so vague and broadly worded as to be "virtually unintelligible." Respondents also contend that the record does not support the finding of a false representation as to the value of their product relative to an electric food processor since no evidence of the value of an electric food processor or the product being marketed by Respondents was introduced into the record.

Paragraph 3(f) of the cease and desist order prohibits Respondents from falsely representing that a "product is substantially more valuable than the payment required to receive it." This provision was included in the cease and desist order because Respondents were found to have falsely represented that their product was substantially more valuable than the $14.77 they were charging (Complaint ¶ 7(f); P.S.D., at 2 & 9-12). The evidence supporting this conclusion consisted of the wholesale price of Respondents' product, the product itself and the absence of any contention by Respondents that an electric food processor is not sub- stantially more valuable than the $14.77 required to receive their product (P.S.D., at 11-12).

On reconsideration, Respondents contend that they do disagree that an electric food processor is substantially more valuable than the $14.77 purchase price (I.D., Findings of Fact (FOF) 23; P.S.D., at 11). However, nowhere in their brief do they refer to the record to show that they stated their disagreement either before the Administrative Law Judge or on appeal to the Judicial Officer. Moreover, by the attachments to Complainant's brief on reconsideration, it is clear that an electric food processor is substantially more valuable than the $14.77 price charged by Respondents (I.D., FOF 25; P.S.D., at 11-12). Further, the evidence is equally clear that Respondents' product is not substantially more valuable than the $14.77 purchase price. The combination of the wholesale price of Respondents' product and the product itself (CX-7) which was viewed, assembled and operated by the Judicial Officer as the finder of fact, was sufficient to constitute a preponderance of the evidence on which to find that the product does not operate at high speed and is not substantially more valuable than the $14.77 price charged by Respondents.

Respondents argue at length that it was improper to base any conclusion on the wholesale price of the product. However, it was clearly stated in the Postal Service Decision (P.S.D., at 11 & 12), and has been stated again in the decision on reconsideration, that the conclusion concerning the value of the product was based not only on the wholesale price of the product, but also on the product itself. Such evidence supported the conclusion reached in the Postal Service Decision. Accordingly, it was properly concluded that Respondents falsely represent that the product is substantially more valuable than the $14.77 required to receive it.

Paragraph 3(f) of the cease and desist order was intended to prevent Respondents from continuing to falsely represent the value of their product and to protect the public from the resumption of the promotion using the same or a different product. While the language of the cease and desist order is necessarily broad because of the representation it was intended to address and the need to protect the public interest, it is not so overly broad or vague as to constitute a violation of Respondents' due process rights.

Indeed, paragraph 3(f) clearly informs Respondents of the false representation prohibited and Respondents should have no difficulty applying its meaning to their future advertise- ments. The words "substantially", "representing" and "more" mean what they are commonly understood to mean, and should be readily understandable when viewed in the context of the prior misrepresentation that the food processor was electric and therefore "substantially more" valuable than the $14.77 required to receive it. Thus, Respondents should have little difficulty assuring that no future misrepresentations occur, since as stated in the Postal Service Decision (P.S.D., at 18), "[i]t is not difficult to choose statements, designs, and devices which will not deceive." United States v. 95 Barrels of Vinegar, 265 U.S. 438, 443 (1924). See also Paul, Marbin & Co., Inc., P.S. Docket No. 28/190 at 13-14 (P.S.D. Oct. 20, 1989); Card Redemption Center, P.S. Docket No. 30/37 at 10 (P.S.D. July 27, 1989).

It is recognized that the provisions of a cease and desist order should be "as specific as the circumstances will permit." See FTC v. Colgate-Palmolive Co., 380 U.S. 374, 392-93 (1965); American Home Products Corp. v. FTC, 695 F.2d 681, 704-05 (3d Cir. 1982). However, cease and desist orders containing broad provisions have been consistently upheld when they are reasonably related to the unlawful act found to exist, Jacob Spiegel Co. v. FTC, 327 U.S. 608, 613 (1946), and there is a likelihood, based on past conduct, that addi- tional violations will occur. American Home Products Corp., 695 F.2d at 704-06. See also FTC v. Mandel Bros., Inc., 359 U.S. 385, 392-93 (1959); FTC v. National Lead Co., 352 U.S. 419, 429-30 (1957); FTC v. Ruberoid Co., 343 U.S. 470, 473 (1952); American Genealogies, Inc. v. United States Postal Service, 717 F. Supp. 895, 899 (D.D.C. 1989); Paul W. Schuette, P.S. Docket No. 29/117 at 5 (P.S.D. Mar. 16, 1989).

In this case, a reasonable relationship exists between paragraph 3(f) of Cease and Desist Order No. CD-3362 and the false representations made by Respondents. Based on Respondents' past practices the likelihood of recurrent violations exists (see P.S.D., at 16-19, 21-24). Thus, a broad cease and desist order is appropriate for issuance in this case.^3/ Furthermore, since the cease and desist order only prohibits Respondents from falsely representing their product, its issuance does not infringe on Respondents first amendment rights. See P.S.D., at 24 and cases cited thereat. As has often been stated, misleading commercial speech is not protected by the constitution. See In Re R.M.J., 455 U.S. 191, 203 (1982); Jay Norris, Inc. v. FTC, 598 F.2d 1244, 1251-52 (2d Cir. 1979), cert. denied, 444 U.S. 980 (1979); Bristol-Myers Co. v. FTC, 738 F.2d 554, 562 (2d Cir. 1984), cert. denied, 469 U.S. 1189 (1985); United States Postal Service v. Athena Products, Ltd., 654 F.2d 362, 366-68 (5th Cir. 1981), cert. denied, 456 U.S. 915 (1982); Health Care Products, Inc., P.S. Docket No. 28/90 at 23 (P.S.D. Mar. 3, 1989), aff'd on recon., (P.S.D. June 27, 1990).

Accordingly, Respondents' arguments on reconsideration concerning paragraph 3(f) of the cease and desist order have no merit.

4. Solicitations in the Guise of Invoices

Respondents next contend the finding that two of their postcards are in the form of, or reasonably could be construed as, a bill, invoice or statement of account due is not supported by the evidence since invoices or bills are not typically sent in the form of a postcard unless they are public utility bills. Respondents' exception is without merit. As Respondents admit, some bills are in postcard form. Respondents' postcard solicitations, CX-2 and CX-3, because of their language and format and the overall impression they create, are in the form of and reasonably could be construed by ordinary recipients to be bills, invoices, or statements of account due (P.S.D., at 14-16).

Thus, under 39 U.S.C. § 3001(d) and § 3005(a) the solicitations are nonmailable and constitute prima facie evidence that Respondents are engaged in conducting a scheme or device for obtaining money through the mail by means of false representations. Respondents have not rebutted the prima facie case established by their own solicitations. Accordingly, there is no merit to this contention.

5. Reliance on Prior Administrative Decision

Finally, Respondents' contend that their due process rights have been violated by the issuance of the cease and desist order, since their solicitations were based on an Administrative Law Judge's finding in the Initial Decision in Card Redemption Center, P.S. Docket No. 30/35 (I.D. Sept. 13, 1988). Respondents' argument that they relied on the Administrative Law Judges's decision in Card Redemption Center was discussed and rejected as unpersuasive in both the Initial and Postal Service Decision (I.D., at 20; P.S.D., at 16-19) since the Initial Decision in Card Redemption Center was not a final agency decision and Respondents' revised solicitation continued to make materially false representations. Respondents' argument that it was proper to rely on the Card Redemption Center Initial Decision and that they, in fact, relied on that decision, is no more persuasive on reconsideration. Accordingly, Respondents' contentions on reconsideration are rejected for the reasons stated that in the Initial and Postal Service Decisions.

Conclusion

Respondents' arguments on reconsideration have been fully considered and found to be without merit. Accordingly, Respondents' Motion for Reconsideration is denied.

James A. Cohen
Judicial Officer

1/ With their Motion for Reconsideration, Respondents also requested a stay of Cease and Desist Order No. CD-3362 pending a decision on their motion. By Order dated April 29, 1992, Respondents' request for a stay was denied.

2/ Under 39 U.S.C. § 3012, any person who evades an Order issued under § 3005 shall be liable for a civil penalty in an amount not to exceed $10,000 a day.

3/ Broad cease and desist orders have been held to be appropriate for issuance in § 3005 proceedings. See, Paul W. Schuette, P.S. Docket No. 29/117 (P.S.D. Mar. 16, 1989); American Genealogies, Inc., P.S. Docket No. 27/83 (P.S.D. May 27, 1988), aff'd, 717 F. Supp. 895 (D.D.C. 1989); Leo Daboub, P.S. Docket No. 19/185 (P.S.D. July 10, 1986).