American Testing Institute v. US Postal Service

Decision Date26 January 1984
Docket NumberCiv. A. No. 83-2272.
Citation579 F. Supp. 1345
PartiesAMERICAN TESTING INSTITUTE, Plaintiff, v. U.S. POSTAL SERVICE, Defendant.
CourtU.S. District Court — District of Columbia

Edward J. Carnot, Rockville, Md., for plaintiff.

Patricia Daniells Carter, Asst. U.S. Atty., Washington, D.C., for defendant.

MEMORANDUM OPINION

JUNE L. GREEN, District Judge.

This action is before the Court on the parties' cross-motions for summary judgment. For the reasons stated below, the Court grants defendant's motion for summary judgment and dismisses this action.

Plaintiff, American Testing Institute, seeks review of the administrative decision of the Judicial Officer of the United States Postal Service ("Postal Service") who concluded that plaintiff was in violation of the postal lottery statute which prohibits the operation of a lottery. 39 U.S.C. § 3005. Plaintiff also requests that the stop mail order issued on July 6, 1983, pursuant to that section, be dissolved. The Court has subject matter jurisdiction over this case pursuant to 39 U.S.C. § 409.

I. The Scheme

American Testing holds itself out as an organization that sends through the mails survey forms, requesting information about the recipients' television viewing habits. Recipients are asked to answer eight simple multiple-choice questions by checking boxes on a "Test Response Form." In the mailing, American Testing announces that any recipient who completes the "Test Response Form" will be awarded one of twenty "special" gifts listed in the mailing. Administrative Record at 33, 35. ("A.R."). All but one in every ten thousand recipients of the solicitation who respond to the mailing receive gift No. 12. Gift No. 12 is a lifetime membership to a national film club. The prize is described in the material as:

UNLIMITED KODAK FILM FOR THE REST OF YOUR LIFE ... Guaranteed Free Life Membership in a National Film Club provides free color film, any size, any exposure, for each roll developed ... THIS GIFT INCLUDES UP TO 40% DISCOUNT ON DEVELOPING $720.00

Id. (Emphasis in original). The solicitation letter also requests remittance of $14.80 to help cover the cost of handling, postage, and administration of the testing.

American Testing has used two types of solicitation letters. The first of these letters includes the following instructions:

FOLLOW THESE INSTRUCTIONS CAREFULLY:
A. Answer all questions on the TEST RESPONSE FORM.
B. Place the completed TEST RESPONSE FORM in the enclosed postage-paid envelope. Include your check or money order for $14.80. This amount covers the cost of shipping, handling, postage, printing and administration of this testing procedure.
C. You are required to mail the completed TEST RESPONSE FORM within ten days from the time you receive it. THERE IS ABSOLUTELY NO PURCHASE OF PRODUCT OR PAYMENT OF SERVICE REQUIRED OR ASKED OF YOU IN ORDER TO RECEIVE YOUR GIFT. Each gift itself is FREE OF CHARGE.
D. Within two-three weeks after we receive your completed TEST RESPONSE FORM, we will send your gift completely prepaid.
NOTE: Every participant who completes the TEST RESPONSE FORM automatically receives ONE gift from the twenty listed above. Highest valued gifts are distributed less frequently than lower valued gifts.

A.R. at 33. (Emphasis in original).

American Testing's more recent letter contains the above instructions with the exception of paragraph B, which was changed to read as follows:

B. Place the completed TEST RESPONSE FORM in the enclosed postage-paid envelope. To help defray the cost of shipping, handling, postage, printing, and administration of this testing procedure, include your check or money order for $14.80.

A.R. at 35.

In addition to the above, the following instructions appear on the back of the "Test Response Form" in the first of the two letters:

Make check or money order payable to AMERICAN TESTING ___ CHECK ___ MONEY ORDER ENCLOSED IS MY CHECK OR MONEY ORDER TO COVER SHIPPING, HANDLING, REGISTRATION PROCESSING AND POSTAGE $14.80 MAIL TO: AMERICAN TESTING INSTITUTE

A.R. at 34. this language was revised in the more recent letter to read as follows:

NOTE: All qualified participants automatically receive one of the 20 gifts shown in the enclosed letter. Make check or money order payable to AMERICAN TESTING ENCLOSED IS MY ___ CHECK ___ MONEY ORDER FOR $14.80 TO COVER SHIPPING, HANDLING PROCESSING AND POSTAGE. ___ NOT ENCLOSED BUT SEND A GIFT ANYWAY.

A.R. at 36.

II. The Administrative History

On October 27, 1982, the Consumer Protection Division of the Law Department of the Postal Service filed a complaint against the plaintiff, American Testing Institute ("American Testing"), to enforce the postal lottery statute, 39 U.S.C. § 3005. Section 3005 provides in pertinent part:

Upon evidence satisfactory to the Postal Service that any person ... is engaged in conducting a lottery, gift enterprise, or scheme for the distribution of money or of real personal property, by lottery, chance, or drawing of any kind, the Postal Service may issue an order which ... directs the postmaster of the post office at which mail arrives, addressed to such a person or to his representative, to return such mail to the sender appropriately marked as in violation of this section ....

39 U.S.C. § 3005.

The complaint alleged that American Testing was engaged in a lottery scheme by using direct mail solicitations urging recipients to complete a "Test Response Form" and mail it with a payment of $14.80. The complaint further alleged that American Testing offered those who completed the test response form and remitted, at their option, $14.80 the opportunity to win one of the valuable prizes listed in the solicitation.

On November 29, 1982, the parties, represented by counsel, presented evidence at a hearing before an Administrative Law Judge ("ALJ") to determine whether American Testing was in violation of section 3005. At that hearing, the parties had the opportunity to be heard, to argue the weight of the evidence presented, and to present, examine, and cross-examine witnesses. The only witness that testified at the hearing was Lee M. Small, an employee of American Testing Institute. During the course of the hearing, American Testing conceded two of the three necessary elements to have a lottery, prize and chance. The remaining element of consideration was the only factor at issue at the hearing.

On December 20, 1982, the ALJ issued an Initial Decision with proposed findings of fact and conclusions of law. In those findings of fact, the ALJ noted, inter alia, that:

At least 60% of the people responding to Respondent's letter considered the offer to require the remittance of $14.80 before they would be eligible to receive one of the 20 "gifts" ....
Every person who sent Respondent a completed test form received one of the twenty "gifts" regardless of whether they remitted the $14.80 or not. Almost every person responding received gift No. 12, the photo club membership. Only one person in every 10,000 received one of the other, more valuable, prizes. A person who remitted $14.80 with the completed test response form received nothing more than a person who merely completed the form and paid nothing. Both of Respondent's letters are artfully worded to lead a person of ordinary intelligence to believe that the remittance of $14.80 is a prerequisite to becoming eligible to win one of the 20 prizes.

A.R. at 42-43.

After considering these facts and all the evidence presented to him, the ALJ found that the plaintiff's activities constituted a violation of 39 U.S.C. § 3005. Using the ordinary man standard he determined that the necessary elements of prize, chance, and consideration were present in plaintiff's solicitation to constitute a lottery within the meaning of the statute. Particularly, the ALJ found that after reviewing the evidence as a whole it was reasonable for a participant in the American Testing survey, who received the first letter, to conclude that he would not receive a prize unless he followed the instructions and remitted the money requested. As to the second letter, the ALJ concluded that that version would lead an ordinary person to believe that he would receive a small inexpensive gift if he did not include $14.80. He concluded that in order to be "qualified" for the big gifts, the recipient would reason that the money requested must be submitted to cover the shipping and handling of the larger, more expensive gifts.

American Testing appealed this initial decision pursuant to 39 C.F.R. § 952.25. It also began conducting business with the same solicitations, but seeking responses under a new name, "Gift Redemption Center," located at a new address. The Postal Service then moved to amend its original complaint to include both the American Testing Institute and "Gift Redemption Center" in the action. Plaintiff opposed this motion and requested an oral hearing on the matter. The Judicial Officer granted the Postal Service's motion to amend its administrative complaint and denied American Testing's motion for an evidentiary hearing.

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...

To continue reading

Request your trial
7 cases
  • US v. Weingold
    • United States
    • U.S. District Court — District of New Jersey
    • 4 Marzo 1994
    ...... UNITED STATES of America and United States Postal Service, Plaintiffs, . v. . Harold P. WEINGOLD, .... Civ. A. No. 94-127 (WGB). . United States District ...§ 3005. American Testing Institute v. U.S. Postal Service, 579 ......
  • American Genealogies, Inc. v. US Postal Service
    • United States
    • U.S. District Court — District of Columbia
    • 17 Julio 1989
    ...be interfered with by the courts unless it has exceeded its authority or is palpably wrong.'" American Testing Institute v. United States Postal Service, 579 F.Supp. 1345, 1348 (D.D.C.1984) (quoting N. Van Dyne Advertising Agency, Inc. v. United States Postal Service, 371 F.Supp. 1373, 1375......
  • Washington Mint v. US Postal Service
    • United States
    • U.S. District Court — District of Columbia
    • 21 Septiembre 1994
    ...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 an......
  • U.S. Postal Serv. v. Amada, 98-15589
    • United States
    • United States Courts of Appeals. United States Court of Appeals (9th Circuit)
    • 12 Enero 2000
    ...of consideration to receive the prize; and (3) the distribution of the prize by chance."); American Testing Institute v. United States Postal Serv., 579 F. Supp. 1345, 1347 (D.D.C. 1984); United States Postal Serv. v. Allied Treatment, Inc., 730 F. Supp. 738 (N.D. Tex. Applying the common l......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT