F.C.C. 69-586 BEFORE THE FEDERAL COMMUNICATIONS COMMISSION In the Matter of WASHINGTON, D.C. 20554 LIABILITY OF ESTHER BLODGETT, LICENSEE OF For Forfeiture MEMORANDUM OPINION AND ORDER (Adopted May 28, 1969) BY THE COMMISSION: CHAIRMAN HYDE AND COMMISSIONER BARTLEY ABSENT. COMMISSIONER JOHNSON CONCURRING IN THE RESULT. 1. The Commission has under consideration: (1) its notice of apparent liability dated August 7, 1968, addressed to Miss Esther Blodgett, licensee of station WMCW, Harvard, Ill., and (2) the licensee's response to the notice of apparent liability dated September 5, 1968. 2. The notice of apparent liability was issued because of the licensee's repeated failures to respond to an official notice of violation, in violation of section 1.89 of the Commission's rules.1 The notice stated that, pursuant to section 503 (b) (1) (B) of the Communications Act of 1934, as amended, the licensee has incurred an apparent liability for forfeiture in the amount of $500. 3. The licensee's response to the notice of apparent liability does not deny the violations, but requests that the notice of apparent liability for forfeiture be rescinded. In support, the licensee asserts that: "These are technical errors *** In the years I have operated WMCW I have given all my time and energy to the broadcast business to the best of my ability. In covering the area WMCW has never been cited for neglect in meeting the obligations." Licensee further states, "There are no exhibits or reports to file at this time. I am asking that the FCC relieve me of this liability and so rule." 4. We have carefully considered the licensee's response and the circumstances surrounding the violations, but we find no reason to rescind the amount of licensee's apparent forfeiture liability. A licensee is not relieved of responsibility for complying with applicable statutes and rules by the fact that it has performed an outstanding public service to the community. A station is expected to provide a public service for its community. Folkways Broadcasting Co., 12 F.C.C. 2d 887 (May 15, 1968). 5. In view of the foregoing, It is ordered, That Esther Blodgett Forfeit to the United States the sum of $500 for repeated violations of section 1.89 of the rules. Payment of the forfeiture may be made by 1 The notice of apparent liability was issued on July 3, 1967, and no response thereto was filed until May 7, 1968. mailing to the Commission, a check or similar instrument drawn to the order of the Treasurer of the United States. Pursuant to section 504(b) of the Communications Act of 1934, as amended, and section 1.621 of the Commission's rules, an application for mitigation or remission of forfeiture may be filed within 30 days of the date of receipt of this memorandum opinion and order. 6. It is further ordered, That the Secretary of the Commission send a copy of this memorandum opinion and order by certified mailreturn receipt requested, to Esther Blodgett, licensee of station WMCW, Harvard, Ill. FEDERAL COMMUNICATIONS COMMISSION, 18 F.C.C. 2d LIABILITY OF BOB JONES UNIVERSITY, LI- For Forfeiture MEMORANDUM OPINION AND ORDER BY THE COMMISSION: COMMISSIONER BARTLEY ABSENT; COMMISSIONER 1. The Commission has under consideration; (1) its notice of apparent liability dated April 10, 1968, addressed to Bob Jones University, licensee of station WMUU, Greenville, S.C., and (2) licensee's reply to the notice of apparent liability dated May 8, 1968, filed May 13, 1968. 2. The notice of apparent liability in this proceeding was issued because the licensee of WMUU broadcast advertisements concerning a Pepsi-Cola "Bottle Cap" prize plan which appeared to contain all of the essential characteristics of a lottery, in violation of section 1304, title 18, United States Code. The notice provided that, pursuant to section 503 (b) (1) (E) of the Communications Act of 1934, as amended, the licensee was subject to an apparent liability for forfeiture in the amount of $1,000. 3. The material facts leading to the issuance of the notice of apparent liability in this proceeding are as follows: The Commission received information from its Atlanta, Ga., field office that station WMUU broadcast the following commercial announcement concerning a Pepsi-Cola "Bottle Cap" prize plan: Pepsi is giving away 400 compact portable tape machines in Greenville. Spartanburg, Laurens, Union and Cherokee Counties. If you're among the first 400 people to find the words "Transistor Tape Player" under a Pepsi cap, you'll be the proud winner of a tape player. Since the above announcement appeared to contain information pertaining to a lottery, the Commission made inquiry of the licensee. In response, by letter dated February 15, 1968, Hcensee stated that WMUU broadcast the above announcement from November 6, 1967, through December 20, 1967, at which time it was discontinued when the Commission's engineer-in-charge notified licensee that a question had been raised concerning the promotion. Licensee stated further that in editing the commercial announcement submitted to it by the Pepsi-Cola Bottling Co., licensee's copy writer *** unfortunately edited out that portion of the announcement mentioning that free caps were available from either the local bottling company or route salesmen. Thereafter, the Commission issued its notice of apparent liability in this proceeding. *** 4. Licensee, in response to the notice of apparent liability, by letter dated May 8, 1968, asserts that the Pepsi-Cola "Bottle Cap" prize plan was not a lottery and requests that it be relieved of liability. In support of its request, licensee avers that "[t]here is no Federal criminal statute which defines or makes illegal the conduct of a lottery which does not involve some interstate activity" and, therefore, since "[t]he promotion in question was confined to five named counties in South Carolina and to residents thereof * **" the question "[w]hether or not the promotion *** constituted a lottery ** [must be] determined by the laws of the State of South Carolina." In this regard, licensee submitted with its response a copy of an opinion of the Attorney General of South Carolina that a "Bottle Cap" prize plan similar to the one under consideration herein was not a lottery since the scheme lacked the necessary element of consideration. In reaching this conclusion, South Carolina's Attorney General stated that participants in the scheme could obtain free bottle caps from one of four bottling plants, or from one of the various cooperating radio stations or route salesmen. Licensee noted in this respect that pursuant to the rules of the Pepsi-Cola promotion, free caps were available from the local bottling 'plant or from one of the local route salesmen. Licensee asserts, therefore, that the Pepsi-Cola "Bottle Cap" prize plan involved in this proceeding was not a lottery under either South Carolina law or section 1304 of title 18, United States Code. Licensee asserts further that "[t]he fact that the 'free bottle caps [phrase] was inadvertently omitted in the WMUU spot announcement could not convert the PepsiCola promotion into a lottery" unless the promotion was, in fact, conducted as a lottery. *** 5. Alternatively, licensee asserts that "[e]ven if the promotion of the Pepsi-Cola Bottling Co. did constitute a lottery, the fine or forfeiture should be remitted ** ** Licensee claims in this respect that "[n]either willfulness nor negligence can be attributed to Radio Station WMUT in connection with advertising the promotion [since] the advertiser had gone to the maximum lengths possible to determine and assure in advance of this promotion that no laws were being violated and that [the] promotion did not constitute a lottery.' Licensee also states that when the Commission's Engineer-in-Charge indicated that a question had been raised about the promotion, WMUU discontinued the announcements that day, even though the Commission's inspector did not suggest that it do so; that its past record should be considered by the Commission; that "a fine would work a financial hardship on WMUU", and that the licensee and WMUU"*** have already been severely damaged by the handling of the charge, the proposed fine, and the attendant publicity given the matter so that a fine or forfeiture would actually constitute an additional penalty." 6. We have carefully considered licensee's reply and the circumstances in this case but we are not persuaded that its broadcast of adver tisements concerning the Pepsi-Cola "Bottle Cap" merchandise sales promotion was not in violation of Federal law.1 Section 1304 of title 18, United States Code provides in pertinent part that no licensee shall permit "*** the broadcasting of, any advertisement of or information concerning any lottery *** offering prizes dependent in whole or in part upon lot or chance ***" Since many States have enacted statutes relating to or affecting merchandise schemes or contests, it is, of course, appropriate that licensees should, as in the present instance, seek advice from the State Attorney General as to the legality of any merchandise scheme under State law. We are here concerned, however, with the meaning and application of a Federal statute which prohibits the broadcast of lottery information or advertisements by a licensee of this Commission. Since the question presented relates to the scope and meaning of title 18, United States Code, section 1304, it must be determined by appropriate Federal officials, and licensee's contention that any determination made by a State official under the laws of South Carolina is controlling, cannot be sustained. 7. Although section 1304 does not undertake to define what constitutes a lottery, it is well settled that the necessary elements of such a scheme in combination, are prize, chance, and consideration. Federal Communications Commission v. American Broadcasting Com pany, 347 U.S. 284 (1954). From the foregoing facts it is evident that the "Bottle Cap" merchandise sales promotion sponsored by the PepsiCola Co. and advertised by licensee contained the elements of prize and chance. Licensee avers, however, that the scheme lacked the element of consideration since free caps were available. 8. The element of consideration is present in a promotional scheme when a person pays money or something else of value, directly or indirectly, for the chance to win a prize. Thus, consideration is present when a participant is required to make a purchase or to pay or risk money or any other thing of value. On the other hand, the mere acts of appearing, registering, and securing free paraphernalia, standing alone, does not constitute consideration. See FCC v. ABC, Inc., supra; Caples Co. v. U.S., 243 F. 2d 232 (1957). If persons may participate in the scheme free of charge-if free chances are made available to them-then the element of consideration is not present and the scheme does not constitute a lottery within the meaning of section 1304. However, thereby to eliminate the element of consideration necessary to support a lottery finding, the free chances must be reasonably equally available to all participants in the contest. Nonpurchasing contestants must be able to obtain chances in the same places at the same times as purchasing contestants, in setting which does not otherwise encourage a purchase. Thus, in any on-product merchandise sales promotion, where chances are affixed to a product which is sold and other chances are given free, "reasonably equally available" means that such free chances can be readily obtained from all or at least most of the customary retail outlets for such products, such as grocery stores and supermarkets. 1 Since section 1304 is part of the Federal Criminal Code, the Commission has had appropriate liaison and consultation with the Department of Justice on the scope of this statutory provision. |