In the Matter of the Petition by                  )
                                                                 )
RICHARD S. LANE                                    )
Vice President                                          )
Suite 150                                                   )
1055 South Wells Avenue                        )
Reno, NV 89502-2550                              )
                                                                  )
                                                                  )
                                                                  )
Denial of Application for Second-Class    )
Mail Privileges for "LANE GUIDE"               )   P. S. Docket No. 39/44

APPEARANCE FOR PETITIONER:              Richard S. Lane, Pro Se
                                                                  Vice President
                                                                  1055 S. Wells Avenue, Suite 150
                                                                  Reno, NV 89502-2550

APPEARANCE FOR RESPONDENT:          Jeffrey H. Zelkowitz, Esq.
                                                                  Law Department, Rate Application
                                                                  United States Postal Service
                                                                  Washington, DC 20260-1146

INITIAL DECISION

This Proceeding arises out of a Petition filed by Richard S. Lane, Vice-President, Lane Guide ("Petitioner") from a ruling of the Director, Office of Mail Classification ("Respondent"), holding that Petitioner's loose-leaf service does not qualify for second-class mail privileges because it is not a "periodical publication" under § 422.1 of the Domestic Mail Manual ("DMM").⁽¹⁾

The parties submitted this case for determination based on a fully stipulated record, which includes a Joint Stipulation of Facts, Exhibits, and Issues. Petitioner filed a brief and Respondent Postal Service filed "Proposed Conclusions of Law; Memorandum of Points and Authorities". Thereafter, Respondent filed a reply brief. To the extent indicated below, proposed conclusions have been adopted; otherwise they have been rejected as irrelevant. Based on the entire record herein, including the stipulations, pleadings and exhibits, I make the following findings of fact and conclusions of law:

Findings of Fact

1. Lane Guide has been published since 1957 by Lane Guide, 1055 S. Wells Avenue, Suite 150, Reno, Nevada 89502-2550. The publishing company is owned by John Lane. (Jt. Stip.1).

2. Lane Guide applied for second-class mail privileges at the Reno, Nevada Post Office as a general publication (Jt. Stip. 2, JX 1). After performing a circulation audit of the records of Lane Guide, the Reno Post Office forwarded the publication's application to the Rates and Classification Center in San Bruno, California. The Rates and Classification Center denied Lane Guide's application in a decision issued on August 22, 1989. (Jt. Stip. 8, 9). Lane Guide filed a timely appeal to the Office of Classification and Rates Administration which was denied by its Director on March 27, 1992 (Jt. Stip. 10,13). The sole basis for both of the denials was the conclusion that Lane Guide is not a "periodical publication", as required by DMM § 422.1. (Jt. Stip. 9, 13, Jt. X. 4, 9).

3. Lane Guide is an information reference and directory publication for the credit, lending, and financial industry in five western states. The publication consists of listings for creditors and lenders servicing accounts in any of the five states covered, including all banks, savings and loans, thrifts, and credit unions and their individual branch offices. Each listing includes names, mailing addresses, telephone and fax numbers, hours, credit rating and deposit account policies, and other abridged information of interest to the industry. These entries are printed in alphabetical order in a loose-leaf format; i.e., on individual pages measuring approximately 6 and 3/4 inches by 11 inches. These pages are pre-punched with three holes to allow for insertion into binders by the subscribers. (Jt. Stip. 4).

4. Issues of Lane Guide are published six times per year. Each issue consists of approximately 36 double-sided sheets. These issues contain complete updated listings, printed in alphabetical order according to the initial letter of the firm listed, for specified letters of the alphabet. For example, an issue may contain an updated set of pages for all entries beginning with the letter "A". Since each issue usually contains update pages for several alphabetical sections of the publication, the pages for each section generally update and supersede prior issues approximately every fourth issue, although occasionally five issues are required to update the entire compilation of the Guide. Each issue also contains instructions for the placement of the updates in the directory, and for the return to the publisher of any pages which contain information changes, marked by the reader, that should be brought to the attention of the editor. (Jt. Stip. 5).

5. The annual subscription price for Lane Guide is $75.00 per year for new subscribers and $55.00 for renewals. These rates are sometimes described as "subscription and membership" fees. In addition to copies of the publication, the subscription fee entitles the subscriber to a listing in the Lane Guide, if desired. This is considered by the publisher to be a courtesy listing, and the Guide includes listings for thousands of institutions which are not subscribers. (Jt. Stip. 6).

6. New subscribers to Lane Guide receive a binder, indexed separator pages, the previous issues (generally four although occasionally five) which constitute the complete and current compilation for the Guide, and instructions for inserting the issues into the binder. Thereafter, the subscriber receives updates every two months, i.e., the bimonthly issues for which the second-class authorization is sought. New issues supersede pages from prior issues, so that the binder contains the complete current Lane Guide as of that date. (Jt. Stip. 7).

7. For purposes of this proceeding only, the parties stipulated that Lane Guide complies with all second class eligibility requirements except DMM § 422.1. The parties further stipulated that Lane Guide does not qualify as a periodical publication under any of the specific provisions in DMM § 422.11 (b) (1), (2), or (3). (Jt. Stip. 17, P.6, ¶ 2).

Conclusions of Law

The sole question for consideration is whether the update pages which make up the bimonthly issues of Lane Guide constitute a "periodical publication" under the general definition in DMM § 422.11(a). ⁽²⁾

The leading case in which the general definition of a periodical publication has been applied to loose-leaf publications is Prentice-Hall, Inc., P.S. Docket No. 4/79, 80 ( I.D. 1976; P.S.D. 1977). In the initial decision in Prentice-Hall, the Administrative Law Judge was called upon to decide whether forty different loose-leaf publications, known as Report Bulletins, were periodicals. With two exceptions, the judge found that the Report Bulletins lacked the characteristics of a periodical publication.⁽³⁾ Thus, most of the Report Bulletins consisted of loose-leaf pages which were designed to be used in conjunction with loose-leaf volumes. The volumes were sold as a package with the update sheets. Second-class mail status was sought only for the update sheets. The update pages were to be "fitted into the existing text so that the pages of the books continue to follow each other in nearly unbroken sequence." Prentice-Hall, Inc., P.S. Docket No. 4/79, 80, I.D. at 67. The judge noted that "[m]any of the pages cannot be usefully read until they are inserted into the book [and that they].... are numbered and set up to be inserted into the section of the loose-leaf books where they belong and to be understood with the remaining text of such sections." Id. at 67-68. The judge found that "[t]he Report Bulletins and the appropriate loose-leaf volumes, sold as a package to petitioner's subscribers, form in fact a single connected whole...".The Report Bulletins "are not in content and function a separate entity from, but are part and parcel of, the loose-leaf volumes or, conversely, the latter are in fact an integral part of petitioners' publications." Prentice-Hall, Inc., P.S. Docket No. 4/79, 80, I.D.at 56.

Lane Guide is similar to the Prentice-Hall Report Bulletins which were found to lack the characteristics of a periodical publication. Thus, new subscribers to Lane Guide receive a binder, indexed separator pages, the previous four or five issues which constitute the complete and current compilation for the Guide, and instructions for inserting the issues into the binder (Jt. Stip. 6). Thereafter, the subscriber receives updated listings for several alphabetical sections of the compilation six times per year, along with instructions for the placement of the updates in the directory ( Jt.Stip. 5). Therefore, the issues of the Guide, are essentially useful only in connection with the compilation of the current issues which subscribers receive at the beginning of the service and which is gradually updated over the course of about four to five editions. Each of the bimonthly update issues standing alone have little value, since they are only portions of the alphabetical listings, such as M-N-O, etc. Indeed, some of the update pages begin in the middle of a listing for a financial institution. See, for example, JX 12(b), pp.C-11 and D-E-F-13; JX-12 (c), pp. C-3, C-13. Furthermore, the update pages in each issue are not numbered consecutively but are paginated in a manner consistent with insertion into the current compilation. In short, the Lane Guide is more like a book than a periodical publication, such as a magazine. The update pages for which Petitioner claims second class mail status primarily serve as a supplement to the current compilation of the Guide and are designed to be kept in the binders provided with the original compilation.

Petitioner makes no attempt to distinguish this case from Prentice-Hall, Inc.. Rather, Petitioner seeks to distinguish Lane Guide from the card reference service that was denied second-class privileges in Deadline Data, Inc., P.O.D. Docket No. 1/149 (1959) and ABC-CLIO, Inc., P.S. Docket No. 23/28 (1987). Petitioner contends that Lane Guide is distinguishable from the card reference service in Deadline Data and ABC-CLIO on the ground that the Guide has no "permanent" text which subsequent issues supplement (Br. 8-10).

Petitioner's attempt to distinguish Deadline Data and ABC-CLIO is misplaced. Regardless of the reference to a "permanent card file" in ABC-CLIO , a close examination of the facts in both of those cases shows that only the file was permanent and the card compilations in Deadline Data and ABC-CLIO changed in approximately the same manner as the compilation of issues in Lane Guide.

Thus, new subscribers to the card service in Deadline Data and ABC-CLIO received a compilation of cards and a metal filing cabinet. Thereafter, subscribers received groups of forty to fifty additional cards each week which added to and replaced cards in the original compilation. Deadline Data, Inc., P.O.D. Docket No. 1/149, sl.op.at 2. Second-class mail privileges were sought only for the weekly group of update cards. Id. The original set of cards which the first-time subscriber received in Deadline Data and ABC-CLIO was not a permanent, unvarying text as Petitioner in this case contends. On the contrary, the basic set changed as new weekly updates were added and outdated cards were replaced. ABC-CLIO, Inc., P.S. Docket No. 23/28, sl.op. at 4-5. As the judge noted in ABC-CLIO, new subscribers to the card service "receive[d] a complete updated set of cards." Id. at 4. (Emphasis supplied).

The sole distinction between the facts in Deadline Data and ABC-CLIO and the facts in this case--aside from the irrelevant differences that the publisher in the latter case supplied cards and a filing cabinet and the Guide provides looseleaf pages and a binder--is that the entire compilation of the Guide changes every four to five issues, or eight to ten months. It is unclear from the statement of facts in Deadline Data and ABC-CLIO how frequently, if ever, the entire compilation of cards is replaced. I find that any such distinction, if it exists, is insufficient to distinguish this case from Deadline Data and ABC-CLIO. Whether the update issues are used in conjunction with a larger text that changes completely on a regular basis or never changes totally, the pertinent question is whether or not the updates function as an integral part of a larger text. If so, relevant precedent holds that the publication is not a periodical under DMM § 422.1. I find that Lane Guide is not a periodical publication within the meaning of the DMM. Prentice-Hall, Inc., P.S. Docket No. 4/79, 80,

I.D. at 56, 67-70; Deadline Data, Inc., P.O.D. Docket No. 1/149, sl.op. at 4-7; and ABC-CLIO, Inc., P.S. Docket No. 23/28, sl.op. at 9-11.⁽⁴⁾

Accordingly, the decision of the Director denying the petitioner's application for second-class privileges is sustained and the appeal is denied.

Judith A. Dowd
Acting Chief Administrative Law Judge

1. The DMM edition under which this matter was initiated has been replaced by a new and substantially reorganized version which became effective July 1, 1993. The new version, however, makes no substantive changes that would affect this decision. 58 Fed. Reg. 34887, June 30, 1993; DMM, Issue 46, July 1, 1993, Unit 1020.

2. DMM §422.11(a), defines a periodical for second-class mail purposes as follows:

A periodical is a publication published at a stated frequency with the intent to continue publication indefinitely. The primary distribution of each issue must be made before that of each succeeding issue. The primary purpose of a periodical must be the transmission of information. A periodical may consist of original or reprinted articles on a single topic or variety of topics, listings, photographs, illustrations, graphs, a combination of advertising and nonadvertising matter, comic strips, legal notices, editorial material, cartoons, or other subject matter. A periodical must also exhibit continuity from issue to issue. Continuity may be evidenced by serialization of articles or by successive issues carrying the same style, format, theme, or subject matter.

3. The Administrative Law Judge found that only the Tax Court Reported and Memorandum Decisions and the Federal Taxes newsletters mailed to subscribers who subscribed solely to the newsletter, constituted periodical publications within the meaning of § 422.1 of the DMM. The judge found that unlike the other Report Bulletins, the Tax Court publication consisted of a collection of the court's decisions "printed and filed in the loose-leaf volumes one after another as a variety of articles by different authors appear in a periodical publication." Prentice-Hall, Inc., Docket No. 4/79, 80, I.D.at 69, 70. The judge further found that the separately sold Federal Taxes newsletters constituted second-class material because they consisted of independent collections of articles which--unlike the other Report Bulletins--could be purchased without insert pages and loose-leaf volumes.Id. at 28-29, 70.

4. Petitioner contends (Pet.'s Br. 24-26) that the Postal Service's denial of second-class privileges to Lane Guide is arbitrary and capricious, since the Postal Service has granted such privileges to certain other loose-leaf services. Petitioner's. contention is without merit. The underlying premise of Petitioner's argument appears to be that the Postal Service employs a per se rule that loose-leaf services do not qualify for second-class mail status under DMM§ 422.11(a). The Postal Service has no per se rule which it applies to all loose-leaf publications. On the contrary, the Postal Service considers each loose-leaf publication on its own merits. See, supra. n.2 (two out of forty looseleaf periodicals, similar in format and appearance and issued by the same publisher, found to qualify for second-class mail privileges). The mere fact that other loose-leaf services may have qualified for second-class mail status while Lane Guide has not, does not cast doubt upon the fairness of the Postal Service's decisions, since a determination of eligibility for second-class privileges often requires that fine distinctions be drawn.