# Petition for Writ of Certiorari — National Taxpayers Union v. Social Security Administration (No. 08-1245)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2009

## Text

ae,

| Supreme Court, U.S.
FILED

No.0 081245 APR 7 - 2009

OFFICE OF THE CLERK
IN THE

Supreme Court of the United States

NATIONAL TAXPAYERS UNION,
Petitroner,
v.

UNITED STATES SOCIAL SECURITY
ADMINISTRATION, OFFICE OF THE
INSPECTOR GENERAL,
Respondent.

On PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE TuiRD CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

JAMES E. McCoLuum, JR. MICHAEL E. GELTNER
McCoL_um Anpb Associates, LLC Counsel of Record
7309 Baltimore Avenue GELTNER AND ASSOCIATES, PC
Suite 117 105 North Virginia Avenue
College Park, MD 20741 Suite 305
(301) 864-6070 Falls Church, VA 22046

(703) 536-2334

Attorneys for Petitioner

225208 cr

;
QUESTION PRESENTED

May the Third and Fourth Circuits overrule the
holding of Illinois ex rel. Madigan v. Telemarketing
Associates, 5388 U.S. 600 (2003) (“Telemarketing
Associates”) that the First Amendment allows
punishment of charitable solicitation only for actual
fraud?

TABLE OF CONTENTS

(nestion Presented «...
J2a

Appendix C

beneficiary wou!d be reluctant to ignore. Even non-
beneficiaries could reasonably infer that the mailing
contains official documents that could affect personal
earnings records maintained by SSA. P. Ex. 37, at 3
(Arnold Decl.).°

¢ When the flyer is opened, it leads to a page with the
“National Taxpayers Union letterhead, below which
the violative language is repeated, in bold,
underlined capital letters:

9. N'TU attacks Professor Arnold’s expertise, pointing out
that the professor admitted that he is not an expert on direct
mail tactics. NTU Br. at 8; Tr. 146. I see no reason why he would
need such expertise in order to opine knowledgeably in this
ease. Professor Arnold’s expertise in communications is
undeniable; he has spent forty years researching, publishing
and teaching in that field. He understands the significance of
language and is fully qualified to comment on how people might
reasonably construe particular words and phrases. Moreover,
much of his testimony simply states the obvious. Interpreting
the plain meaning of the language on such blatantly deceptive
mailers does not require great expertise. Even NTU, although
denying the section 1140 violation, concedes that its use of
language “might abuse the recipient.” NTU Br. at 4n.6

33a

Appendix C

OFFICIAL NATIONAL SURVEY ON
SOCIAL SECURITY

CONDUCTED BY
THE NATIONAL TAXPAYERS UNION
108 NORTH ALFRED STREET
ALEXANDRIA, VIRGINIA 22314

AND COMMISSIONED FOR

THE SOCIAL SECURITY ADMINISTRATION
THE WHITE HOUSE
UNITED STATES HOUSE OF
REPRESENTATIVES
UNITED STATES SENATE

(Emphasis in original), P Ex. 17, at 3. The page then
addresses the recipient by name (ISSUED TO: [name
deleted]), followed by what appears to be very specific
identifying information (QUALIFYING ZONE &
RATING; CERTIFICATION NUMBER, and RETURN
DATE). But this identifying information is, in fact, of
absolutely no consequence except to create the
impression of consequence.

Following that language, in underlined, red capital
letters is the “JMPORT INFORMATION’ section. The
recipient is again mentioned by name (in fact, the
recipient’s name is repeated throughout the mailer) and
told:

34a
Appendix C

YOUR NAME WAS SPECIFICALLY CHOSEN
to receive this OFFICIAL SURVEY ON
SOCIAL SECURITY...

... Because you have a VALID SOCIAL

SECURITY NUMBER and live in one of the
QUALIFYING ZONES from which we are

required to seleci at least ONE participant.

(The ellipses are in the original; emphasis is also in the
original). Then the mailing tells the recipient (again by
name) that the recipient's participation in the survey is
crucial.

And because you or your spouse has paid into
the Social Security system and are receiving
or expect to receive benefits in the future. ...

P Ex. 17, at 3: R. Ex. 1.

In reviewing this language, Professor Arnold observed
that “the recipient’s logical conclusion is that SSA has
shared official information with NTU, information that
only SSA would be privy to, in order for NTU to conduct
an official survey on SSA’s behalf.” P Ex. 37, at 3-5
(Arnold Decl.). I agree. The references to the recipient’s
social security number and eligibility create the
impression that NTU has specific information that it
could only have obtained from SSA. As one recipient of

35a
Appendix C

an NTU mailer (and of Social Security)'® explained to
NTU’s private investigator,

Ms. Fischer: Because in there someplace it
says something about people collecting, if I
remember correctly.

Mr. Roche: Collecting Social Security?

Ms. Fischer: Yes. I didn’t know how they
would have possibly found that out.

* * *

Ms. Fischer: It seemed to mc that they knew
that I was collecting — somehow they got my
Social Security number, which is supposed to
be private. Nobody is supposed to know that.

Mr. Roche: Right.

Ms. Fischer: Otherwise they wouldn’t have
known my birthday or my — the fact that I
was collecting —

Further, I agree with the I.G. that the assertion that
NTU is required to select at least one participant from
each “qualifying zone” tells the recipient that NTU is
not conducting the survey for itself, but is acting at the

10. As discussed 7ufru, Laura Fischer received Version 2

of the mailer, which contains this same language.

36a
Appendix C

direction of others who have imposed this requirement.
Inasmuch as no other entities are mentioned, logic dictates
that SSA, the White House, and/or Congress imposed that
requirement.

¢ On page 4 of the mailing, under the bold red caption
“WHAT ARE THE OPTIONS? CAN SOCIAL
SECURITY BE SAVED?”, the mailer describes NTU
“{a]s the authorized sponsor of this survey and
a credible voice in Washington, D.C. that has
exclusively represented the interests of the American
taxpayer....”

(Emphasis in original); P Ex. 17, at 6; R. Ex. 1. Director
Frank defended this language by asserting that NTU was
the “authorized sponsor” because it authorized itself to
conduct the survey. Tr. 61. And Copywriter Geske insisted
that if the recipient “read the entire package” he/she would
“understand very clearly that it was the National
Taxpayers Union.” Tr. 287. But no one would reasonably
infer that NTU required authorization from itself to
sponsor a survey. “Authorization” suggests approval by
an outside entity with some authority, and, again, according
to the mailer, SSA, the White House, and Congress are
the authorizing entities.

The mailer then includes the inevitable, and repeated,
requests for donations, along with the ersatz survey. P
Ex. 17, at 8, 10; R. Ex. 1 (“[Name deleted] thank you for
your valued participation in this important survey on Social
Security. Please return your survey today in the envelope
provided and won’t you please do your part to help the
National Taxpayers Union save Social Security by enclosing
your donation of $25 or more. .. .”’). Tr. 14-16.

37a
Appendix C

Version 2.

Director Frank responded to the I.G.’s cease-and-desist
letter by removing from the mailer the most conspicuous
references to the “Social Security Administration.”
Tr. 19-20. The revised mailer still purports to contain an
“OFFICIAL NATIONAL SURVEY ON SOCIAL
SECURITY” that was “COMMISSIONED BY THE
NATIONAL TAXPAYERS UNION FOR THE WHITE
HOUSE AND CONGRESS OF THE UNITED STATES.”
(Emphasis in original). P Ex. 18, at 1; R. Ex. 2. The mailer
contains the same specific, faux-consequential identifying
information. The recipient is addressed by name and
advised that her name was “SPECIFICALLY CHOSEN”
to receive this OFFICIAL NATIONAL SURVEY ON
SOCIAL SECURITY because she lives in a“QUALIFYING
ZONE” from which NTU is “required” to select a
participant and she is the “ONLY individual from a total
of 89” in the above “QUALIFYING ZONE” whose name
matches the other “important demographic and economic
data that’s central to the purpose of this survey.” P Ex.
18, at 3; R. Ex. 2."' It still refers to the recipient’s Social
Security eligibility, and refers to NTU as the “authorized
sponsor” of the survey. P Ex. 18, at 6; R. Ex. 2.

I do not find that eliminating “Social Security
Administration” from the listed “survey sponsors”

11. Copywriter Geske would not admit that this “one of
89” number was a fabrication, but he could not explain why the
remaining 88 names would not have qualified, nor why
recipients from various zones were all “one of 89.” Tr. 270-77.

38a
Appendix C

brought the mailer into compliance with section 1140.
The mailer continued to use the term “Social Security”
as “part of an overall design” that conveys the
impression that the mailer contains an important Social
Security document (the survey) sent on behalf of official
government sources. This violates section 1140.
See United Seniors Association, 423 F.3d 408.

Laura Fischer is a retiree receiving Social Security
benefits. P Ex. 34, at 1 (Fischer Decl. 11). She has had
no association with NTU, but a copy of Version 2 was
mailed to her in about June 2002. /d. at 2 (Fischer Decl.
11 4, 5). She testified, credibly, that she does not
generally open such solicitations, but she opened this
one because of the bold red reference to Social Security
and because it indicated that a “certified survey” was
enclosed. /d. at 2 (Fischer Decl. IT 4). Tr. 80, 227-28,
235. At first she thought that SSA was involved with
NTU’s request, but, having worked for SSA in the
distant past, she considered it unlikely that SSA would
sponsor a private solicitation for funds. So she called
SSA to inqui®e. /d. Thus, the 1.G. has not only shown
that NTU’s mailing “could be interpreted” as conveying
a false impression (satisfying the “low threshold” set by
the statute), but has also shown that the mailing in fact
confused its recipient, enticing her to open it, read its
contents, and call SSA. Had the envelope not referred
to SSA, she would have discarded it, unopened.”

12. Ms. Fischer's inclination to diseard such mail illustrates
Congress’ additional concern about the effect of deceptive
(Cont'd)

38a
Appendix C

brought the mailer into compliance with section 1140.
The mailer continued to use the term “Social Security”
as “part of an overall design” that conveys the
impression that the mailer contains an important Social
Security document (the survey) sent on behalf of official
government sources. This violates section 1140.
See United Seniors Association, 423 F.3d 405.

Laura Fischer is a retiree receiving Social Security
benefits. P Ex. 34, at 1 (Fischer Decl. 11). She has had
no association with NTU, but a copy of Version 2 was
mailed to her in about June 2002. /d. at 2 (Fischer Decl.
1{ 4, 5). She testified, credibly, that she does not
generally open such solicitations, but she opened this
one because of the bold red reference to Social Security
and because it indicated that a “certified survey” was
enclosed. 7d. at 2 (Fischer Decl. IT 4). Tr. 80, 227-28,
235. At first she thought that SSA was involved with
NTU’s request, but, having worked for SSA in the
distant past, she considered it unlikely that SSA would
sponsor a private solicitation for funds. So she called
SSA to inquire. /d. Thus, the I.G. has not only shown
that NTU’s mailing “could be interpreted” as conveying
a false impression (satisfying the “low threshold” set by
the statute), but has also shown that the mailing in fact
confused its recipient, enticing her to open it, read its
contents, and call SSA. Had the envelope not referred
to SSA, she would have discarded it, unopened."

12. Ms. Fischer’s inclination to discard such mail illustrates
Congress’ additional concern about the effect of deceptive

(Cont'd)

39a

Appendix C

Version 8.

After receiving the LG.’s November 7, 2002 cease-and-
desist letter, NTU mailed out a third version of the
solicitation/survey. P Ex. 19, at 1; R. Ex. 3.

* Written on the outside of Version 3, in even larger
underlined bright red capital letters is: “OFFICIAL
NATIONAL SURVEY ON SOCIAL SECURITY.” As
in Version 2, immediately beneath that, in smaller
capital letters, is “CoMMISSIONED By THE NATIONAL
TAXPAYERS UNION For WHITE House AND CONGRESS
Or Tue UNITED STATES.”

(Emphasis in original).

¢ Again, when the flyer is opened, it leads to a page
with the NTU logo and NATIONAL TAXPAYERS
UNION in bold letters.

Immediately below that, in red, capitalized italics, is:
REQUIRED NOTIFICATION AND DISCLAIMER:

(Cont'd)

mailers. People are so inundated with “official” mail that they
are not able to distinguish genuine correspondence from SSA,
and are more likely to discard it, seriously hampering SSA’s
ability to communicate with its constituents. United Seniors
Association, 423 F.3d at 399. See also SSA v. United Seniors
Association, DAB CR1075, at 4-5 (2003); House Comm. on Ways
and Means, 102d Cong., 2d Sess., Report on Deceptive
Solicitations 5 (Comm. Print 1992).

40a
Appendix ©

Then, in capital letters: THE NATIONAL
TAXPAYERS UNION IS LEGALLY RECOGNIZED
AND REGISTERED AS A NOT FOR PROFIT
ORGANIZATION BY THE UNITED STATES
GOVERNMENT. THIS ORGANIZATION IS
INDEPENDENT FROM SAID GOVERNMENT
AND RECEIVES NO FUNDING OR SUPPORT OF
ANY KIND BY THE U.S. GOVERNMENT, ITS
AGENCIES OR ANY OF THE BRANCHES
THEREOF MOREOVER, THE ENCLOSED
OFFICIAL NATIONWIDE OPINION POLL ON
SOCIAL SECURITY /JS SPONSORED BY SAID
ORGANIZATION TO INSURE THAT CERTAIN
VIEWPOINTS HELD BY THE GENERAL
PUBLIC ARE FAIRLY AND ACCURATELY
REPRESENTED.

(Emphasis in original). P Ex, 19, at 3; R. Ex. 3. Even if
this were a credible disclaimer, the statute explicitly
precludes me from considering a disclaimer in
determining a violation under section 1140.
Determination of a violation “shall be made without
regard to any inclusion in such item ... of a disclaimer
of affiliation with the United States Government or any
particular agency or instrumentality thereof.” Act,
§ 1140(a)(3).

Moreover, the disclaimer paragraph is more an exercise
in obfuscation than a legitimate disclaimer. First, NTU
claims legal] recognition and registration by the U.S.
government, which suggests some official government
sanction beyond that afforded a typical non-profit

4la

Appendix C

organization. The next sentence, though, disavows any
financial connection with the government. Then comes
the reference, in bold, to the OFFICIAL NATIONWIDE
OPINION POLL ON SOCIAL SECURITY, sponsored,
not by NTU, but by “said organization.” The antecedent.
for “said organization” is ambiguous. Careful parsing
of the passage suggests that it refers to NTU, but the
more casual reader could easily conclude that it refers
to SSA, or some other government agency or branch.
See P. Ex. 37, at 10-11 (Arnold Decl.)

The next paragraph confuses the reader even more,
suggesting that NTU’s poll has been sponsored or
endorsed by both the legislative and executive
branches of government, or, as SSA argues, that
NTU is working with the President and Congress
to conduct the _— survey. It reads:
ACKNOWLEDGMENT: IT IS FURTHERMORE
HEREIN ACKNOWLEDGED THAT SAID
OFFICIAL NATIONWIDE POLL ON SOCIAL
SECURITY HEREIN CONTAINED WAS
COMMISSIONED FOR THE PRESIDENT OF
THE UNITED STATES, THE HONORABLE
GEORGE WALKER BUSH, AND MEMBERS OF
THE UNITED STATES CONGRESS.

The next section repeatedly addresses the recipient
by name, advises her that the branches of
government are formulating new policies for the
“SOCIAL SECURITY PROGRAM,” that will have
a “profound effect” on her retirement benefits,
eligibility requirements, and the manner in which

42a
Appendix C

the program is administered. The mailer tells her
that her views “will influence those policies and
changes” but that she “MUST PARTICIPATE by
filling-out and returning the Official Nationwide
Opinion Poll on Social Security.” The letter then
repeats that she was selected because of her
“eligibility status.”

Again the reference to the recipient’s eligibility status
suggests that NTU obtained confidential infatuation
from SSA about this particular recipient. The
admonition that she “must participate” suggests that
her failure to do so could adversely affect her receipt of
benefits. See P Ex. 37, at 12 (Arnold Decl.).

NTU argues that I should require “a properly designed
survey to establish whether the recipient class
(the reasonable person) would understand the NTU
solicitations to be government-sponsored.” NTU Br. at
7. Of course, at approximately $ 100,000 per survey, such
a requirement would render section 1140 virtually
unenforceable. See ‘Ir. 155. While such a survey might
be admissible as evidence, and NTU was certainly free
to conduct and submit the results of such a survey,
nothing in the statutory language, regulations, nor case
law suggests that SSA must do so in order to halt the
blatant misuse of protected words and symbols. Indeed,
the reviewing courts have unanimously affirmed the
ALB’s authority to determine violations without such
evidence. United Seniors, 423 F.3d 397; SSA uv. National
Federation of Retired Persons, DAB No. 1885 (2003),
aff'd, 115 Fed.Appx. 763, 2004 WL 2980874 (C.A.5),

43a
Appendix C

Moreover, this argument — that a survey would show
that no one could reasonably interpret the mailer as
conveying a false impression of government involvement
— would be in the nature of an affirmative defense, for
which respondent bears the burden of going forward
and the burden of persuasion. 20 C.E.R. § 498.215(b)(1).
I note also that NTU has exclusive control over the
recipient information necessary to conduct such a
survey, information it did not share with the I.G., even
in response to subpoenas (see SSA Reply at 11; Tr. 39-
41), and was thus the only party in a position to
undertake such a survey.

All three versions of NTU’s Social Security mailer were
designed to entice the recipient to open it, to send in a
response, and to send money. Tr. 141. To achieve these
purposes, the mailers are fraught with deliberately
ambiguous and deceptive language that repeatedly
includes the protected ‘Social Security” words. By any
objective standard, NTU’s use of those protected words
conveyed the false impression that the mailers’ contents
were approved, endorsed, or authorized by SSA. The
language used in the mailers also suggested that NTU
had some connection with or authorization from SSA.
The I.G. has thus established that NTU violated section
1140, without regard to what NTU knew or should have
known about how its mailing would be interpreted. I
next consider what NTU knew or should have known.

44a
Appendix C

2. NTU knew or should have known that its
solicitations conveyed or could reasonably
have been interpreted as conveying the
false impression that its mailings were
approved, endorsed, or authorized by SSA,
or that NTU had some connection with or
authorization from that agency.

In SSA v. United Seniors, Judge Kessel wrote:

Respondent is a sophisticated mass marketer
of ideas. its life blood is its appeals to senior
citizens on a range of social and policy issues.
It has vast experience in making mass
mailings. That sophistication makes it obvious
that Respondent knew what it was doing
when it designed the envelopes that are at
issue in this case.

United Seniors, DAB CR!075, at 18 (2003), aff’d 423
F.3d 397 (4" Cir. 2005); see also National Federation of
Retired Persons, DAB No. 1885, at 238, 28, aff’d, 115
ed.Appx. 763, 2004 WL 2980374 (where Respondent
deliberately and prominently displayed protected
language on the outside of its mailings to induce
recipients to open them, and where it used protected
language on the inside to induce recipients to respond,
it not only knew or should have known that its mailing
created a false impression, it specifically designed those
mailers to create that impression).

45a

Appendix C

Judge Kessel’s words also apply to NTU; it is an
experienced mass marketer of ideas that knew exactly
what it was doing when it designed the mailers in this
case. Richard Geske is an experienced copywriter, well-
versed in direct mail techniques." He carefully and

13. Copywriter Geske was not a particularly credible witness.
He attempted to circumvent even simple questions, and, at times,
his spirited defense of NTU’s actions bordered on the absurd. For
example, notwithstanding the names of three governmental bodies
on the outside of the mailer, Copywriter Geske refused to
acknowledge that the envelope contained any reference to the
government:

Q. Do you see how it says, “Commissioned by the
National Taxpayers Union for the Social Security
Administration, White House and Congress of the
United States”?

A. Yes.

Q. Okay, why did you make that reference to the
government?

A, Well, it’s not a reference to the government, in my
opinion...

JUDGE HUGHES: Do you understand that the
Social Security Administration is a government
agency?

THE WITNESS: Yes, I do.

JUDGE HUGHES: And the White House is a
government entity?

THE WITNESS: Right.

JUDGE HUGHES: As is the Congress of the United
States?

THE WITNESS: Yes. oe
(Cont'd)

46a
Appendix C

deliberately chose the mailer language. He put on the
outside of the mailer “OFFICIAL NATIONAL SURVEY
ON SOCIAL SECURITY.” He acknowledges that he
chose this language “to get attention.”

The object of the text on the exterior of the
mailer is to get attention. In writing a mailer
like this, there is a risk that recipients will see
it as “junk mail” and throw it away, and the
use of bold lettering and messages on the
exterior is designed to encapsulate the entire
message so the recipient may decide quickly
that it is worthwhile to read further."

(Cont'd)
JUDGE HUGHES: Okay, so it is a reference. I think
we can all agree that this is a reference to the
government.

THE WITNESS: Well, actually, I think it’s abundantly
clear. It means that — exactly what it says. Here is a
survey. The National Taxpayers Union is conducting
this survey. And they had the authority to do this task

~~ hence the word “commissioned” — for the Social
Security Administration, blab, blab, blah.
Tr. 260-62.

14. NTU has argued that its mailers so resembled “junk
mail” that no reasonabie person would have considered it
anything else. Copywriter Geske’s testimony here — that he
designed the outside of the mailer to distinguish it from “junk
mail” so that the recipient would take it more seriously —
undercuts that argument. Moreover, there is simply no “junk

(Cont'd)

47a
Appendix C

R. Ex. 15, at 4-5 (Geske Decl. 110). When asked why the
lettering “Official National Survey on Social Security,”
was even larger on Version 3 than the earlier versions,
he said that he actually wanted the larger font size on
all versions in order to “to bring attention to this
particular piece.” Tr. 289-90.

Copywriter Geske admitted that the survey was his idea;
he came up with it as an “involvement technique,” which
he described as a technique, commonly used in direct
mail, that is “proven” to increase responses. Tr. 252-53."
He included the personalized references and the
language, “you or your spouse has paid into the Social
Security system and are receiving or expect. to receive

(Cont'd)

mail” exception to section 1140. Congress enacted section 1140 to
address problems created by “direct mailers,” i.e. purveyors of
junk mail. See Deceptive Mailings and Solicitations to Senior
Citizens and Other Consumers: Hearing before the Subcomm. on
Social Security, and the Subcomm. on Oversight of the House
Committee on Ways and Means, 102d Cong., 2d Sess. 124 (Comm.
Print 1992) (1992 House Hearing); Deceptive Solicitations,
Including Findings and Recommendations of the Subcommittees,
H. R. Rep. No. 9, 102d Cong. 2d Sess. 45 (1992) (1992 House Report).
A “junk mail” exception would devour the rule, leaving nothing.

15. On the other hand, he also claimed that NTU planned to
use the survey as the “centerpiece” for its lobbying campaign.
“The results of the survey were going to ke collected, tabulated,
ond then used literally, again, as a centerpiece for their lobbying
can.naign.” Tr. 254. But when reminded that NTU was not even
aware of the survey, that he had concocted it to increase responses,
he said “Tl can’t answer for them.” Ty. 254.

48a
Appendix C

benefits in the future.” He admitted that he did not
actually know whether any particular recipient fell into
this category; he assumed that most people did, and
included the language because a higher degree of

personalization is shown to increase response rates.
Tr. 263.

Next, I find unconvincing NTU’s assertion that it would
deliberately have avoided any suggestion of an
association with the government because its target
audience is so hostile. The above discussion establishes,
however, that Copywriter Geske deliberately included
references to “Social Security, and, as Director Frank
acknowledged, the Social Security program does not
engender a negative response, even from those most
hostile to government. Tr. 35-36. Moreover, NTU’s
mailers and some of its mailing lists suggest no animosity
to the administration in power at the time. See P. Ex.
19, at 3; R. Ex. 3 (“COMMISSIONED FOR THE
PRESIDENT OF THE UNITED STAPLES, THE
HONORABLE GEORGE WALKER BUSH, AND
MEMBERS OF THE UNITED STATES
CONGRESS”); P Ex. 19, at 8 (“The President of the
United States, the Honorable George Walker Bush, the
Honorable Members of the United States Congress...
owe you a debt of gratitude and appreciation.”)

I note finally that NTU knew or should have known that
its mailers conveyed a false impression because the 1.G.’s
April 3, 2002 warning letter told them so when the I.G.
attempted to elicit voluntary compliance. But NTU not
did comply. Instead, it made minimal, cosmetic changes,
and sent out Versions 2 and 3.

49a
Appendix C

B. SSA proposes a reasonable penalty of 50¢ per
violation ($274,582 total).

Having found that NTU violated section 1140, I must
now determine an appropriate penalty. The statute and
regulations authorize penalties of up to $5,000 for each
piece of mail containing the violative language. Act,
§ 1140(b); 20 C.ER. § 498.103.

Responding to a subpoena, NTU advised SSA that it
sent out 549,164 of the mailers. PR Ex. 14.'° The I.G.
proposes imposing a penalty of 500 per mailer, for a total
of $274,582. I am authorized to affirm, deny, increase, of
reduce this amount. 20 C.F-R. § 498.220. In reaching my
decision, I must consider the following factors: (1) the
nature and objective of the advertisement, solicitation,
or other communication, and the circumstances under
which they were presented; (2) the frequency and scope
of the violation and whether a specific segment of the
population was targeted; (3) the prior history of the
individual, organization, or entity in their willingness
or refusal to comply with informal requests to correct
violations; (4) the history of prior offenses of the
individual, organization, or entity in their misuse of
program words, letters, symbols, and emblems; (5) the
financial condition of the individual or entity; and

16. NTU has provided numbers that do not exactly add
up. Compare P. Ex. 14 with P. Ex. 16 (suggesting a total of 549,045
mailers sent — 205,663 Version 1 mailers + 291,968 Version 2
mailers + 51,414 Version 3 mailers). NTU has exclusive contro]
of the figures, and can hardly complain that the I.G. has taken
it at its word. So I accept the 549,164 figure.

50a
Appendix C

(6) such other matters as justice may require. The use
of a disclaimer of affiliation with the U.S. government,
SSA, or its programs is not a mitigating factor in
determining the amount of the penalty. 20 C.F.R.
§ 498.106.

I note, initially, that 50¢ per violation is a low penalty.
Compare United Seniors, DAB CR1075, at 18 ($1.00 per
envelope) and National Federation of Retired Persons,
DAB CR968, at 3 ($1.00 per mailer).

!. Nature and objective of the solicitations
and the circumstances under which they
were presented.

As discussed above, NTU’s solicitations were designed
to increase its “membership”” and to raise money.
Employing well-established marketing techniques, NTU
deliberately employed protected language to induce
recipients to open its mailers and to respond.

2. Frequency, scope of the violation, and
whether a specific segment of the
population was targeted.

NTU mailed 549,164 solicitations from January 2002
through February 2003. P. Exs. 14, 16. I consider this a
substantial number of solicitations.

17. Recipients were not told that sending money made
them members of NTU. Tr. 14. They were told that their
contribution would “help ... save Social Security” See, e.g.,
P Ex. 17, at 10. In fact, their contributions were simply added to
NTU’s general revenues. Tr. 44.

Sla
Appendix C

The elderly are among the most vulnerable in our
population, and the group about whom Congress
expressed the most concern when it enacted section
1140. SSA asserts that the elderly were targets of
NTU’s solicitations, which would justify an increased
penalty. NTU denies that charge, claiming that it
targeted a somewhat younger group, and selected
names from mailing lists of those likely to share its views.

While NTU sent mailers to all of its “members”
(see Footnote 17),"* the objective data shows that it also
specifically targeted the elderly. That data is found at
P Ex. 16 (see also R. Exs. 12, 18, and 14). The document
is initially confusing because it includes figures for at
least two additional mailers, which have nothing to do
with this case (a “Fair Tax Insert Package” and an
“Abolish the IRS” mailer). Pages 1-3, 7-9, and 12-14 of P
Ex. 16(R. Ex. 12, at 1-3; R. Ex. 13, at 1-3; and R. Ex. 14,
at 1-3) contain the data for those irrelevant mailers. The
relevant data is at P Ex. 16, pages 4-6 (containing
Version 1 mailing information), pages 10-11 (containing
Version 2 mailing information); and page 15 (containing
Version 3 mailing information). See also, R. Ex. 12, at 4-
6; R. Ex. 18, at 4-5; and R Ex. 14, at 4. Tr. 159 et seq.

Version 1: NTU sent solicitations to individuals selected
from mailing lists provided by specific groups with which
it had arrangements to share such lists. NTU mailed
Version | to 148,238 individuals from selected mailing

18. NTU’s former lobbyist, Alfred W. Cors, Jr., noted that
the “average direct mail recipient and respondent” is a 70-year-
old widow. Tr. 113.

S2a
Appendix C

lists (including some NTU internal lists) and 57,425 to
individuals whose names were in NTU’s “house file,”
for a total of 205,663 mailers sent. Tr. 166; P. Ex. 16, at
5, 6; R. Ex. 12, at 5, 6.'° Of these 37,976 mailers were
sent to individuals whose names were drawn from five
group lists targeting senior citizens: Direct Mail
Seniors” (providing two lists of 5,945 names and 19,253
names); American Seniors for Government Reform
(providing two lists of 4,097 names and 5,290 names);
and United Seniors Association PAC Donors (3,391
names). SSA Ex. 16, at 4; Tr. 163-65.

Version 2: NTU sent out 291,968 of the Version 2
mailers. Of those, more than half, 149,631 mailers, were

19. In his declaration, Director Frank agrees with the total,
but divides it differently, stating that Version 1 was sent to 119,207
narnes selected from mailing lists and 86,456 names from NTU’s
own house file. R. Ex. 17, at 4 (Frank Deci. 4 9). (The house file
consists of those who have previously responded to NTU
solicications. Tr. 37-38). NTU has not exptained these figures, but
it appears that in May 2002, NTU sent 57,425 mailers to individuals
whose names were drawn. from its house file. P Ex. 16, at 6. To that
Director Frank adds earlier mailings sent to names drawn from
NTU’s internal lists: NTU Petition Signers/Nondonors (7,531
mailers); NTU Email Names from 1/02 (7,886 mailers); NTU Email
Names from 2/02 (6,691 mailers); NTU Email Names Non-donors
(835 mailers); and NTU Expires (6,088 mailers) for a total of 86,456.
P Ex. 16, at 4. The remaining 119,207 mailers were sent to names
drawn from other lists.

20. According to its list manager, Direct Mail Seniors are
“older Americans” who are “are genuinely concerned about the
rights of senior citizens, and have donated to a campaign
addressing Social Security and Medicare issues.” R. Ex. 6, at 34.

53a

Appendix C

sent to individuals whose names were drawn from
groups targeting seniors: American Seniors for
Government Reform (5,414 names); Seniors Against
Benefit Cuts (18,814 names); Seniors Coalition (62,125
names); Seniors for Equitable Retirement (4,941
names); and Direct Mail Seniors (58,337 names).
P Ex. 16, at 10, 11; Tr. 167-69.

Version 3: NTU sent out 51,414 of the Version 3 mailers.
These went exclusively to names drawn from either the
house file or seniors organizations. 28,705 of the names
were drawn from lists targeting seniors: Seniors for
Equitable Retirement (4,047 names); Seniors Against
Benefit Cuts (two lists of 3,620 names and 9,471 names);
and American Seniors for Government Reform (11,567
names). P Ex. 16, at 15; Tr. 170-71.

Thus 40% of the mailers were sent to individuals whose
names were selected from senior citizen mailing lists
(216,312 of 549,045).

Ryder T. Ulon is a “list broker.” For the last six vears,
he has been NTU’s exclusive account representative.
His job includes identifying the best lists for NTU’s
mailings. R. Ex. 16. He testified that he selects the lists
that he deems appropriate and he considers the content
of the mailing in selecting the lists. Tr. 176, 184. He also
claimed, unconvincingly, that he made “absolutely no
effort to select retired persons, senior citizens, social
security recipients or the like,” and to bolster this claim,
suggests that “Biker Magazine” provided one of the lists
he used for the Social Security mailers. R. Ex. 16, at 1-

54a
Appendix C

2 (Ulon Decl. 11 1-2, 6); R. Ex. 6; Tr. 179. But the data
shows that, in fact, none of the Social Security mailers
went to “Biker” listees. P Ex. 16.

Broker Ulon’s testimony is misleading because he did
not limit himself to the lists he drew from for the Social
Security mailers. He provides a long “list of lists” from
which he purportedly selected names for the “3 NTU
mailings (including the Social Security package).” R. Ex.
16, at 3 (Ulon Decl. 1 8). But in referring to the “8 NTU
mailings” he does not mean the three versions of the
Social Security mailing, which are the subject of this
appeal. He means the Social Security mailer in all three
forms plus the “Fair Tax” mailer and the “Abolish the
IRS” mailer. So his “list of lists” tells us virtually nothing
about where the violative mailings were sent. It only
suggests that the recipient names were drawn from some
of the listed organizations. And in fact, R. Ex. 5 and
P. Ex. 16 show that the Social Security mailing was
not sent to anyone from the Biker Magazine list. The

“Fair Tax” mailer went to Biker Magazine list names.
P Ex. 16, at 2.

Broker Ulon also omitted from his “list of lists” an
organization called Seniors Coalition, even though
62,125 Social Security mailer recipients were selected
from that list. R. Ex. 16, at 3; Tr. 169; P Ex. 16, at 11.
The “Seniors Coalition” is described as “the premier
direct mail seniors list in the industry!” That list is made
up of individuals concerned about senior citizen issues.
The “donors” are “age 60+,” and the list is
recommended for any mailer trying to reach “the mature

55a
Appendix C

audience with disposable income.” R. Ex. 6, at 19. Broker
Ulon characterized his omission of the group as an
“oversight.” Tr. 169. But I find it strange that he would
include Biker Magazine and multiple other
organizations, to which NTU sent zero of the Social
Security mailers, and omit an organization to which it
mailed tens of thousands.

The evidence thus establishes that NTU targeted senior
citizens for receipt of these mailers.

3. The prior history of the individual,
organization, or entity in their willingness
or refusal to comply with informal requests
to correct violations.

While NTU was in the process of sending out Version 1,
the 1.G. notified NTU of its concerns, and sought
voluntary compliance. P. Ex. 5. In a response that I
consider less than straight-forward, NTU agreed to
cooperate, and to change the package design so that it
would not create the impression of SSA authorization.
P Ex. 6; see footnote 2, supra. But NTU’s changes were
superficial, and its subsequent mailers were violative,
and it continued to send them out for aimost a full year
after receiving the I.G.’s letter.

56a
Appendix C

4, The history of prior offenses of the
individual, organization, or entity in
their misuse of program words, letters,
symbols, and emblems.

SSA concedes that NTU has no prior section 1140
offenses.

5. The financial condition of the individual
or entity.

I am satisfied that the I.G. has carefully reviewed NTU’s
financial records, and correctly determined that NTU
is capable of paying this penalty. For its part, NTU has
not argued otherwise.

6. Such other matters as justice may
require.

[am concerned about NTU’s investigative tactics in this
case. It was certainly within the organization’s rights to
interview the I.G.’s potential witnesses. However, NTU’s
private investigator, John Roche, went to Laura
Fischer’s home where he misrepresented himself,
claiming that he represented the attorney for “Agora
Publishing.” R. Ex. 19; Tr. 226 et seg. I found wholly
unconvincing his assertion that this was simply my
error.” Tr. 240-41. Frankly, this action alone might have
justified my increasing the penalty in this case, and, had
the I.G. asked that I consider it, | would seriously have
entertained the prospect.

S7a
Appendix C

V. Conclusion

For all of these reasons, I find that NTU has violated
section 1140, and, under the authority granted me in
20 C.ER. § 498.220, I affirm the $274,582 CMP proposed
by the 1.G.

s/ Carolyn Cozad Hughes
Carolyn Cozad Hughes
Administrative Law Judge

S8a

APPENDIX D — ORDER OF THE UNITED STATES
COURT OF APPEALS FOR THE THIRD CIRCUIT
DENYING PETITION FOR REHEARING
DATED JANUARY 9, 2009

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 07-3381

NATIONAL TAXPAYERS UNION

Petitioner,
v.

UNITED STATES SOCIAL SECURITY
ADMINISTRATION; OF FICE OF THE
INSPECTOR GENERAL

Respondent.

SUR PETITION FOR PANEL REHEARING

Present: FUENTES, HARDIMAN and GARTH,
Circuit Judges

The Petition for Rehearing filed by the Appeilant in
the above-entitled matter, having been submitted to the
judges who participated in the decision of this court,
and no judge who concurred in the decision having asked
for rehearing by this panel, the Petition for Rehearing
is hereby DENIED.

Ya

Appendix D
BY THE COURT,
/s/ Julio M. Fuentes
Circuit Judge

DATED: January 9, 2009

60a
APPENDIX E — EXCERPTS FROM OPINION OF
HHS DAB APPELLATE DIVISION IN SOCIAL

SECURITY ADMINISTRATION v. NATIONAL
FEDERATION OF RETIRED PERSONS

Department of Ilealth and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
DATE: June 20, 2003
Civil Remedies CR968
App. Div. Docket No. A-03-16
Decision No. 1885
In the Case of:
Social Security Administration,
Petitioner,
V.
National Federation of Retired Persons,
Respondent.

RECOMMENDED DECISION ON REVIEW OF
ADMINISTRATION LAW JUDGE DECISION

6la

Appendix E

Discussion

NFRP makes numerous contentions to this appeal. We
address them in the four sections below. Section A
addresses the contentions regarding the ALJ’s section
1140 liability findings. Section B addresses NF RP’s
contention that the ALJ abused her discretion by
doubling the CMP proposed by SSA. Section C
addresses NFRP’s constitutional arguments. Finally,
Section D addresses NFRP’s contentions regarding the
ALJ’s evidentiary and other rulings.

A. Section 1140 liability

Section 1140 establishes two liability standards, which
we refer to as the “knowledge standard” and the
“reasonableness standard.” A person violates section
1140 under the knowledge standard if he uses Social
Security program words in a solicitation or other
communication “in a manner which [he] knows or should
know would convey ... the false impression that such
item is approved, endorsed, or authorized by the Social
Security Administration|.]” Under the reasonableness
standard, a person violates section 1140 if the
communication “reasonably could be interpreted or
construed as conveying” the false impression that it was
approved, endorsed, or authorized by SSA. For
narrative purposes, we first consider the ALJ’s findings
under the “reasonableness” standard.

62a

Appendix E

1. Substantial evidence supports the ALJ’s
finding that the contested mailers
“reasonably could be interpreted or
construed as conveying the false impressiu:i”
of SSA approval, endorsement, or
authorization.

On its face, the reasonableness standard does not
require SSA to establish that some person actually had
a false impression that the communication was endorsed,
approved, or authorized by SSA. Section 1140 requires
only that a person of average intelligence “could” get
such a false impression from inspecting the
communication. In addition, section 1140 does not
require a factual misrepresentation or proof that some
person was actually deceived by the communication. It
requires only that the communication leave or create a
“false impression.” An impression is “a notion, feeling,
or recollection, esp[ecially] a vague one.” Webster’s New
World Dictionary (2d College ed.).* A false impression,
then, is a suspicion or vague notion based on an
incomplete or erroneous understanding of the facts.

2. In the America Heritage Dictionary (4th ed. 2000), the
primary definition of “impression” is “[a]n effect, feeling, or
image retained as a consequence of experience.” A secondary
definition is “a vague notion, remembrance, or belief.”

63a
Appendix E

2. Substantial eridence supports the ALJ’s
finding that the NFRP knew or should have
known that its mailers would convey the false
impression proscribed by section 1140.

Section 1140’s knowledge standard is in fact a
negligence standard. See Huntzinger v. Hastings
Mutual Ins. Co., 148 F.3d 302, 312 (7th Cir. 1998) (“knew
or should have known” are words connoting a liability
standard sounding in negligence); Levine v. CMP
Publishers, Inc., 738 F.2d 660, 672 (Sth Cir. 1984). Thus,
NFRP has violated section 1140 if it knew or, in the
exercise of reasonable care, should have known that the
mailers would create the false impression of official
endorsement, approval, or...

* * *

C. Constitutional claims

During the proceedings before the ALJ, NFRP
contended that SSA’s enforcement action amounted to
an unlawful infringement of its First Amendment rights.
See NF RP Motion for Summary Judgment. The ALJ
declined to address this constitutional challenge, finding
that she was bound to apply section 1140 and the
accompanying regulations. See Rulings and Summary
of Telephone Conference, dated April 16, 2002.

It is well-settled that administrative tribunals do not
have the power to declare a statute or regulation
unconstitutional. Sentinel Medical Laboratories, DAB

64a

Appendix E

No. 1762 (2001). Section 498.204 of SSA’s regulations
reflects this principle, stating that an ALJ lacks the
authority to “[flind invalid or refuse to follow Federal
statutes or regulations.” 20 C.FR. § 498.204.

NFRP contends that section 498.204 does not apply
because it is alleging only an “unconstitutional
application” of federal law, not that the law is invalid.
NFRP Brief at 97-98. However, the terminology used
by NFRP in its argument calls to mind a claim that the
statute and regulations are unconstitutional as applied.
We interpret section 498.204 as precluding the ALJ from
considering both facial and “as applied” challenges to
the statute and regulations. Thus, to the extent that
NFRP’s contention is that section 1140 and its
regulations are unconstitutional as applied, the ALJ
committed no error in refusing to address it. In any
event, as we now explain, the constitutional arguments
made by NF RP are substantively meritless or constitute
facial challenges to the statute that are beyond our
authority to address.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386017_0373%3A1. Public record. Not legal advice.