November 30, 2018

THE GENERAL COUNCIL OF THE PUBLISHING HOUSE v. UNITED STATES POSTAL SERVICE

P.S. Docket No. PER 16-204

APPEARANCES FOR PETITIONER:
Michael Textor, Esq.
J. Taylor White, Esq.
Kutak Rock LLP

APPEARANCES FOR RESPONDENT:
Lauren Schuttloffel, Esq.
Valerie Pelton, Esq.
Maria Votsch, Esq.
United States Postal Service

POSTAL SERVICE DECISION
This appeal involves a denial by the Postal Service’s Manager, Product Classification, of a periodicals mailing privileges application for reduced non-profit postage rates for the publication Worldview.  Petitioner, The General Council of the Assemblies of God d/b/a Gospel Publishing House (hereafter Gospel Publishing), challenged that denial under 39 C.F.R. § 954, Rules of Practice in Proceedings Relative to the Denial, Suspension, or Revocation of Periodicals Mail Privileges.
Background
On September 14, 2018, Chief Administrative Law Judge James G. Gilbert issued an Initial Decision.  39 C.F.R. § 954.19.  That decision ruled in most respects in Gospel Publishing’s favor, but ultimately ruled in favor of the Postal Service on one narrow ground.  Gospel Publishing appealed to the Judicial Officer.  39 C.F.R. § 954.20. 
Virtually the entire hearing focused on whether Worldview contains “general advertising,” or “publisher’s own advertising,” within the meaning of Domestic Mail Manual (DMM) rules.  See Tr. 208.  The Initial Decision referred to the distinction as “the most serious issue[ ] facing [Gospel Publishing’s] ability to obtain nonprofit Periodicals rates . . . .”  Initial Decision at 27.  The Initial Decision found in favor of Gospel Publishing on that most serious issue, but nonetheless ruled against it.
DMM 207.8.1.2(a) and (b) provide that an applicant’s records be available so the Postal Service can determine (a) the number of copies of the periodical printed, and
(b) the manner of distribution and disposition of all copies.  Despite noting that the ruling of the Manager, Product Classification, denying periodicals mailing privileges “does not state that the applicant failed to produce the specific documents,” Initial Decision at 20, the sole basis for the Initial Decision’s ruling involved Gospel Publishing’s failure to provide or reconcile discrepancies in that documentation.  Initial Decision at 26-28.
The pre-hearing record
It was unclear before the hearing whether a violation of DMM 207.8.1.2(a) and (b), and the materiality of a violation if found, would be addressed by Judge Gilbert.  In his Order on Motion for Summary Judgment, February 23, 2018, the judge summarized his understanding of the Postal Service’s basis for denial of non-profit postage rates for Worldview and identified the issues of material fact to be litigated in a hearing.  The Order did not reference DMM 207.8.1.2(a) and (b) record-keeping.
Judge Gilbert’s subsequent Order to File Pre-Hearing Report sought to clarify matters by requiring the parties to identify the facts that would be addressed in the hearing.  Order to File Pre-Hearing Report, March 15, 2018 at 1.  Gospel Publishing’s Pre-Hearing Report, April 27, 2018 at 6-7, identified eleven issues of fact to be litigated at the hearing, none of which involved DMM 207.8.1.2(a) and (b) record-keeping.  Indeed, referring to an earlier submission by the Postal Service, Gospel Publishing’s Pre-Hearing Report states that it did not list among the issues of fact to be litigated any other factual disputes “because of the secondary nature of those items.”  It also states that Gospel Publishing “does not believe that [these other issues (inferentially including DMM 207.8.1.2(a) and (b) record-keeping)] should be made part of the upcoming trial.  Depending on the ruling, if required, [Gospel Publishing] will be happy to try to provide this information.”  Petitioner’s Pre-Hearing Report at 8 n. 2.  No such pre-hearing ruling appears in the record.
The Postal Service’s Pre-Hearing Report identified nine issues of fact to be litigated at the hearing, none of which involved DMM 207.8.1.2(a) and (b) record-keeping.  Respondent’s Pre-Hearing Report, April 27, 2018 at 12-13.  The Postal Service’s Report identified compliance with DMM 207.812 recordkeeping generically, as an issue of law.  However, the Postal Service also stated that “this issue only needs to be decided if [Gospel Publishing] intends to argue, in the alternative, that it should qualify under the Institutions and Societies with general advertising category.”  Respondent’s Pre-Hearing Report at 14 n. 5.¹  Gospel Publishing argued, and the Initial Decision agreed, that Worldview includes “publisher’s own advertising” not “general advertising.”  Initial Decision at 9-14.
The hearing
Throughout the May 15, 2018 hearing, both parties and the judge acted as if record-keeping, or a discrepancy within those records, concerning the number of copies of Worldview printed and the manner of their distribution and disposition, was not before the judge for resolution.  Rather, attention focused on other issues which the Initial Decision addressed in detail, in Gospel Publishing’s favor.
For its part, as I have explained, the Postal Service’s Pre-Hearing Report did not clarify its position that a record-keeping discrepancy (which the Manager, Product Classification’s denial ruling did not mention) remained disputed and could be dispositive.  Neither the Manager, Product Classification, nor any other witness testified for the Postal Service in this case, the subject matter of which lies entirely within the unique realm of postage rate applicability with which the Postal Service is most familiar. 
The Postal Service certainly did not explain any such concern, and the Postal Service’s representatives did not examine Gospel Publishing’s witnesses on the matter.
Gospel Publishing submitted Exhibit H into evidence, and appears to have relied substantially on it to show the number of Worldview copies printed and their manner of distribution and disposition.  Gospel Publishing did not elicit testimony from any of its three witnesses to explain possible discrepancies concerning Exhibit H and other documents, which appears to have been necessary given the judge’s concern about record-keeping inconsistencies expressed in the Initial Decision.  Ultimately, those concerns, unexplained by the parties, formed the sole basis of the decision itself.  Initial Decision at 27.  Gospel Publishing argues that had it been placed on notice that the issue needed to be proved, it would have attempted to have done so during the hearing.  That rings true to me.²
Judge Gilbert presided at the hearing as if a factual dispute involving discrepancies in the number of Worldview copies printed and their manner of distribution and disposition was not relevant to his decision.³ See Tr. 208, 254-258.  He then decided the case on just that basis.  Initial Decision at 26-28.
Basis for reversal, in part, and resulting remand
On the appellate record, I am unable to determine whether Gospel Publishing satisfied DMM 207.8.1.2(a) and (b).  I am unable to determine whether a satisfactory explanation exists for discrepancies between the documents that were submitted such as Exhibit H and information in the denied application.  I am unable to determine whether any such discrepancies should or should not be considered material so as to result in denial of Gospel Publishing’s application.  Without clear pre-hearing notice that the matter required proof, would be decided by the judge, and could be material to the outcome, it simply is not fair in my view, to rule against Gospel Publishing due to insufficient evidence.  This is particularly so in the context of the complex web of shifting burdens of proof and production that Judge Gilbert painstakingly explained.  See Initial Decision at 6-8, 21.  I prefer that resolution of the facts supporting the solely dispositive question be based on direct evidence rather than on inferences drawn from the lack of such evidence.
I therefore reverse the Initial Decision in part, vacate its Order and, in accordance with 39 C.F.R. § 954.15, re-open the hearing for the Presiding Officer to take additional evidence.  On remand, the parties should be afforded the opportunity to present evidence concerning satisfaction of DMM 207.8.1.2(a) and (b), and whether and if so why, those record-keeping requirements are material to the Postal Service’s rate eligibility determination.  My decision should not be construed to include any opinion on the other issues decided in the Initial Decision.

ORDER
The Initial Decision is reversed in part, and its Order is vacated.  The case is remanded for further fact-finding consistent with this decision.