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WASHINGTON MINT v. USPS

September 21, 1994

WASHINGTON MINT, Plaintiff,
v.
UNITED STATES POSTAL SERVICE, Defendant.



The opinion of the court was delivered by: GREENE

 The Court held a hearing in June, 1993 on the parties' cross-motions for summary judgment in this case, which involves a challenge to a Cease and Desist order issued by the Postal Service. The plaintiff, Washington Mint, claims that the Cease and Desist order was not supported by the evidence, that Washington Mint was improperly denied a hearing, and that the Judicial Officer who issued the order did not have the authority to decide this type of matter. Defendant, the United States Postal Service, argues that the Order was supported by the evidence, plaintiff's due process rights were not violated when it was denied a hearing and the Acting Judicial Officer did have authority to render a decision. For the following reasons and in consideration of the testimony and evidence offered at the hearing and in the parties' filings, the Court will deny plaintiff's motion for summary judgment and will grant defendant's motion for summary judgment.

 The plaintiff, a mail order corporation which makes oversize replicas of United States coins *fn1" , seeks to enjoin an order by the Postal Service which held that the plaintiff's advertisements violate a previous Cease and Desist order entered against the Washington Mint by the USPS in June 1989.

 In April, 1988 the Post Office initiated administrative proceedings against the Washington Mint alleging that its advertisements violated 39 U.S.C. § 3005, which prohibits the use of the mail to engage in schemes by means of false representations. The initial complaint was dismissed by an administrative law judge in January, 1989, but the ALJ's decision was reversed on administrative appeal by the acting Judicial Officer. Accordingly, the acting Judicial Officer issued a Cease and Desist order against the plaintiff prohibiting it from falsely representing that it or its product is affiliated in any way with any government agency or that the "coins" sold are legal tender. The Cease and Desist order also required that the plaintiff's advertisements specifically state, in each instance where the word "pound" appears, whether the reference is to avoirdupois or troy pounds. *fn2"

 The Washington Mint sought judicial review of this administrative decision in the this Court. Judge Oberdorfer upheld the acting Judicial Officer's decision on July 24, 1990 and this ruling was summarily affirmed by the Court of Appeals on June 12, 1991.

 Having exhausted all available judicial remedies, the plaintiff generated new advertising for its products, which it claims complied the Cease and Desist order. The new ads are very similar to the original versions, although some changes were made in the text of the ads.

 The current phase of this litigation arose out of the USPS' administrative petition for supplemental orders with the Judicial Officer in April, 1992. This action was taken because of concerns that the plaintiff's modified advertisements still violated the Cease and Desist order. On May 15, 1992 the plaintiff filed an answer to the petition and requested a hearing on whether the new ads violated the Cease and Desist order. The request for a hearing was denied, and after the parties were given the opportunity to supplement the record, the acting Judicial Officer found that the new ads were in violation of the existing order. Consequently, a new mail stop order was issued on November 27, 1992 covering the new addresses being used by the plaintiff On December 17, 1992 the plaintiff brought suit in this Court seeking to enjoin USPS from enforcing this order. Both parties then filed motions for summary judgment, and a hearing was held thereon.

 II

 There are few, if any, facts in dispute with respect to the plaintiff's claims. On the merits, it appears that, although changes were made in the advertisements, substantial evidence exists to support the acting Judicial Officer's conclusion. Additionally the plaintiff has failed to demonstrate that a hearing on the USPS' supplemental petition would have been of any value. The final issue, the acting Judicial Officer's authority, presents a closer question on which there is little precedent. However, the Court concludes that the acting Judicial Officer did have the authority to render his decision.

 The Postal Service is authorized to issue mail stops and Cease and Desist orders upon evidence "that any person is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations . . ." 39 U.S.C. § 3005(a) (1993). Under the APA, a determination by the USPS that a violation has occurred may be set aside if it is arbitrary and capricious, 5 U.S.C. § 706(2)(a), or if it is not supported by substantial evidence. 5 U.S.C. § 706(2)(e).

 The USPS power to enforce this statute "may not be interfered with unless it has exceeded its authority or is palpably wrong." American Testing Inst. v. United States Postal Serv., 579 F. Supp. 1345, 1348 (D.D.C. 1984) (citations omitted). Where the entire record evinces substantial evidence supporting the USPS decision and no errors of law were made, that ruling should be affirmed. Id., at 1349. Substantial evidence is defined as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Consolidated Edison Co. v. National Labor Relations Bd., 305 U.S. 197, 224, 83 L. Ed. 126, 59 S. Ct. 206 (1938). Substantial evidence is "something less than the weight of the evidence, and the possibility of drawing two inconsistent conclusions from the evidence" does not preclude a finding that the agency decision was supported by substantial evidence. Consolo v. Federal Maritime Comm., 383 U.S. 607, 620, 16 L. Ed. 2d 131, 86 S. Ct. 1018 (1966). In conducting this analysis, the Court should give substantial deference to the agency's determination. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984); N. Van Dyne Advertising Agency, Inc. v. United States Postal Serv., 371 F. Supp. 1373, 1375-76 (S.D.N.Y. 1974).

 In this case the acting Judicial Officer concluded that Washington Mint's new advertisements violated the existing Cease and Desist order. The question of whether an ad contains misrepresentations is judged by the impressions they would most probably produce in the minds of ordinary people. Donaldson v. Read Magazine Inc., 333 U.S. 178, 189, 92 L. Ed. 628, 68 S. Ct. 591 (1948). That sophisticated readers might be able to decipher the true nature of an ad is not a bar to a finding of fraud. Id. What is critical is the "ultimate impression upon the reader [which] results not only from what is stated but also from what is reasonable implied." N. Van Dyne Advertising Agency, Inc., supra, 371 F. Supp. at 1376 (citations omitted). *fn3" In support of the Judicial Officer's decision, the defendant highlighted the numerous similarities between the old and the new ads. Although plaintiff did alter the text to some extent, both sets of advertisements state that the coins are of "limited issue", use the words "mint", "proof", and "strike" repeatedly, and in several instances only changed a few adjectives in an effort to comply with the Cease and Desist order.

 Other evidence supporting the Judicial Officer's decision is the use of a Pennsylvania Avenue mailing address in Washington, DC, the similarity of the product to the real U.S. Silver American Eagle Silver Bouillon coin, and the use of ...


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