The Postal Service, pursuant to 39 U.S.C. § 3007, submitted an application to the United States District Court in the Southern District of Florida for a temporary restraining order and preliminary injunction to detain all correspondence that responded to plaintiff's solicitation until the completion of all administrative proceedings on the matter. On January 20, 1983, the Honorable William M. Hoeveler issued a preliminary injunction directing the Postal Service to detain American Testing's incoming mail that related to the alleged lottery solicitation. United States Postal Service v. American Testing Institute, 83-010-Civ-WMH (S.D. Fla. 1983). The court found that there was sufficient "probable cause" to believe that American Testing was violating 39 U.S.C. § 3005. Id.
On July 6, 1983, the Judicial Officer for the Postal Service issued the final agency decision finding that plaintiff was, in fact, engaged in a lottery enterprise under section 3005. Based on that decision he issued an order to the Miami Postmaster to withhold from delivery and return all mail that was related to plaintiff's lottery solicitation.
The Judicial Officer, in his de novo review of the initial decision, determined that the ALJ's conclusions were correct. He agreed with the conclusion that an ordinary participant, receiving American Testing's survey in its entirety, would conclude that in order to be equally eligible to win one of the prizes offered, that person must remit $14.80. The Judicial Officer further determined that the language of both solicitations, coupled with a 60 percent response rate with money enclosed ("remittance response rate") in the first solicitation, supported the conclusion that an ordinary reader would interpret American Testing's solicitation to require payment of $14.80 in order to be equally eligible to win a valuable prize.
Plaintiff filed suit August 5, 1983, requesting review of the Postal Service's final agency decision. Simultaneously with the filing of the complaint, plaintiff filed a motion for a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure. On September 15, 1983 the Court, after having heard argument, denied plaintiff's motion for a preliminary injunction.
III. Conclusions of Law
American Testing has challenged the conclusions of both the ALJ and the Judicial Officer and seeks summary judgment in its favor. It argues that the findings of both the ALJ and the Judicial Officer cannot be supported by substantial evidence in the record. The Postal Service has also filed a motion for summary judgment, arguing that there was sufficient evidence to support the agency's conclusion that American Testing was conducting a lottery, in violation of section 3005. Because there are no genuine issues of material fact and the only issue that is before the Court is one of law, the parties' motions for summary judgment under Rule 56 of the Federal Rules of Civil Procedure are proper.
The Postal Service's stop-order was issued pursuant to section 3005, which provides that the Postal Service may issue such an order where it determines that a lottery enterprise is being conducted. This Court has the power to review such a determination by the Postal Service under chapter seven of the Administrative Procedures Act, 5 U.S.C. §§ 704, 706. It is important to note, however, that the Court's review of administrative determinations is a limited one. See generally, Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 95 L. Ed. 456, 71 S. Ct. 456 (1951). It is plain that "the power . . . vested in the Postal Service [by 39 U.S.C. § 3005] may not be interfered with by the courts unless it has exceeded its authority or is palpably wrong." N. Van Dyne Advertising Agency, Inc. v. United States Postal Service, 371 F. Supp. 1373, 1375 (S.D.N.Y. 1974), citing Public Clearing House v. Coyne, 194 U.S. 497, 509, 24 S. Ct. 789, 48 L. Ed. 1092 (1904); followed in Unique Ideas, Inc. v. United States Postal Service, 416 F. Supp. 1142, 1144 (S.D.N.Y. 1976). Courts apply the substantial evidence test as the standard of review. Substantial evidence has been defined as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolo v. Federal Maritime Commission, 383 U.S. 607, 620, 16 L. Ed. 2d 131, 86 S. Ct. 1018 (1966) (quoting Consolidated Edison Co. v. N.L.R.B., 305 U.S. 197, 229, 83 L. Ed. 126, 59 S. Ct. 206 (1938); followed in Refrigerated Transport Co. v. I.C.C., 616 F.2d 748, 751 (5th Cir. 1980) (per curiam).)
The Court in reviewing the Postal Service's final agency decision must therefore confine itself to determining whether, considering the record as a whole, there is substantial evidence to support the agency's findings of fact and whether errors of law have been committed. Universal Camera Corp. v. N.L.R.B., 340 U.S. at 490; Whirlpool Corp. v. Occupational Safety and Health Review Commission, 207 U.S. App. D.C. 171, 645 F.2d 1096, 1101 (D.C. Cir. 1981). See also Vibra Brush Corp. v. Schaffer, 152 F. Supp. 461, 464 (S.D.N.Y. 1957), ORDER VACATED ON OTHER GROUNDS, 256 F.2d 681 (2d Cir. 1958) (court may only upset Postal Service's findings where there is no showing that the agency's decision is supported by substantial evidence.)
The Court finds that the Judicial Officer's decision is supported by substantial evidence. The Judicial Officer in his de novo review carefully examined the record, the transcript of the hearing before the ALJ, the evidence presented at the hearing, and the ALJ's initial decision. He concluded after looking at the whole record that the ALJ came to the correct decision.
American Testing has challenged the conclusions of the Judicial Officer as not being supported by substantial evidence. Plaintiff argues that the necessary element of consideration was not present to form the basis for a lottery. It first contends that the decision by the Judicial Officer that American Testing was conducting a lottery cannot be supported by the language of the solicitations. It argues that the letters clearly state that payment is not required and therefore the administrative officers could not conclude that consideration was present and that plaintiff was conducting a lottery.
The Court believes that plaintiff's contention is without merit. Both the ALJ and the Judicial Officer determined that each solicitation, read in its entirety, would lead an ordinary person to believe that payment is required in order to receive a gift. The inconsistency in the language of both solicitations does not lead an ordinary person to conclude that money is not required in order to have a chance to win one of the valuable prizes. Rather, the deliberate ambiguity in the wording of the solicitation compels an ordinary person to believe that if he or she wants an even chance at receiving a valuable gift, the remittance of $14.80 is necessary. The Court will not upset this determination by the ALJ and the Judicial Officer.
Plaintiff also contends that the administrative officers did not apply the proper law in determining whether American Testing was conducting a lottery. The Court is also not persuaded by this argument. The solicitations and other evidence were judged in their totality and upon the impression they would most likely create in the minds of those who received the solicitations. E.g., Donaldson v. Read Magazine, 333 U.S. 178, 185-89, 92 L. Ed. 628, 68 S. Ct. 591 (1948). The administrative officers applied the ordinary person standard, "not with a lawyer's eye to 'fine spun distinctions' but with an eye to their over-all effect upon the average reader. Donaldson v. Read, (1948) 333 U.S. 178, 92 L. Ed. 628, 68 S. Ct. 591 . . . and cases cited." American Image Corp. v. United States Postal Service, 370 F. Supp. 964, 966 (S.D.N.Y. 1974), aff'd mem., 503 F.2d 1397 (2d Cir. 1974). Under this standard, the Judicial Officer concluded that plaintiff was conducting a lottery in violation of section 3005. That finding is supported by substantial evidence on the record.
American Testing also claims that the ALJ and Judicial Officer relied on the 60 percent remittance response rate for the first mailing without considering countervailing evidence in the record. It argues that the administrative officers failed to address the large number of requested and granted refunds. Specifically, plaintiff refers to the following testimony at the administrative hearing.
Q. The people who are complaining or want refunds, can you explain the nature of their complaints or why they want refunds?
A. I would say --