United Parcel Service, Inc., a New York Corporation, and United Parcel Service, Inc., and Ohio Corporation v. United States Postal Service

604 F.2d 1370, 1979 U.S. App. LEXIS 12625
CourtCourt of Appeals for the Third Circuit
DecidedAugust 7, 1979
Docket78-2390
StatusPublished
Cited by31 cases

This text of 604 F.2d 1370 (United Parcel Service, Inc., a New York Corporation, and United Parcel Service, Inc., and Ohio Corporation v. United States Postal Service) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United Parcel Service, Inc., a New York Corporation, and United Parcel Service, Inc., and Ohio Corporation v. United States Postal Service, 604 F.2d 1370, 1979 U.S. App. LEXIS 12625 (3d Cir. 1979).

Opinions

OPINION OF THE COURT

GARTH, Circuit Judge.

This is an appeal from a final order of the district court which permanently enjoined the defendant United States Postal Service (hereafter Postal Service) from engaging in a parcel post experiment until it obtained approval from the Postal Rate Commission, in compliance with 39 U.S.C. §§ 3622-25. We affirm.

I

In 1970 Congress enacted the Postal Reorganization Act of 1970, 39 U.S.C. §§ 101 et seq. The Act created the Postal Service as an independent unit of the executive branch, 39 U.S.C. § 201. It also created the Postal Rate Commission as a separate independent establishment, 39 U.S.C. § 3601.

The Postal Service is governed by a Board of Governors, 39 U.S.C. § 202, which pursuant to 39 U.S.C. § 402 established an Executive Committee. The Executive Committee is comprised of the Postmaster General, the Deputy Postmaster General, various Assistant Postmasters General, the Chief Postal Inspector, and the General Counsel. 39 C.F.R. § 221.5(d)(1) [1978].

On September 26, 1977 the Executive Committee in accordance with the duty imposed upon the Postal Service to “plan, develop, promote, and provide adequate and efficient postal services at fair and reasonable rates and fees,” 39 U.S.C. § 403(a), approved implementation of a parcel post experiment called the Local Parcel Service Test Plan. A detailed description of the Plan may be found in the district court’s [1372]*1372opinion, United Parcel Service v. United States Postal Service, 455 F.Supp. 857, 861-62 (E.D.Pa.1978). Suffice it to say that the Postal Service in mid-October 1977 instituted a twelve-month bulk mailing experiment to test the cost and service feasibility of charging a fixed fee per item for each item mailed by twenty selected shippers, rather than calculating the amount of postage by weighing each individual parcel. Twenty selected shippers in five metropolitan communities 1 entered into contracts with the Postal Service whereby each guaranteed a minimum mailing volume of 50 pieces per day and 250 pieces per week. Delivery of the items was limited to the geographic area covered by the Postal Service Bulk Mail Facility serving the shipper (intra-BMC delivery). Under the test plan eligible articles were (1) items mailable as parcel post and (2) third class single piece mail. “Nonmachineable outsides” (i. e., parcels of unusual dimensions which require hand processing) were not eligible articles. The articles had to be containerized, addressed for delivery in the BMC service area and all special service parcels had to be isolated.

Sample weighings of randomly selected items in the bulk shipment were used to determine the average weight of all items. The cost of mailing each item was based on the average weight thus determined. The cost to the shipper of mailing 50 or more items averaging five pounds or less was 87 cents per item. The cost per item when average item weight was over five, but under twenty, pounds was $1.15 per item. This fixed-fee postage payment system eliminated the need to calculate postage individually on each parcel. In any event, the cost of mailing an item under the test plan differed substantially from the cost of mailing the same item by regular parcel post under the rates and mail classification schedule then in effect. 455 F.Supp. at 861 n.7, Exhibit 2, Appendix at 47.

United Parcel Service (hereafter UPS), the plaintiff in this action, is a private parcel delivery service. UPS, complaining that the Postal Service had no authority under statute or regulation for conducting such an experiment, commenced an action in the Eastern District of Pennsylvania seeking to enjoin the Postal Service test.

The Postal Service, however, asserting that its test involved neither a change in rates nor a change in classification of mail within the meaning of 39 U.S.C. §§ 3622-23, claimed that such a Plan did not require submission to approval by, or authorization of the Rate Commission.2

The Postal Service and UPS submitted the issues to the district court on a stipulation of facts together with certain exhibits and affidavits. Although expressing its belief that “as a matter of pure policy the result advocated by the Postal Service is more desirable . . .” 455 F.Supp. at 863, the district court held that the test plan effected a change in a postal rate and a mail classification. Agreeing with UPS, it thereupon entered an order on July 19, 1978 which “ . . . permanently enjoined [the United States Postal Service], from continuing in operation the parcel post experiment known as the Service Test Plan until such time as it has complied with the provisions of 39 U.S.C. §§ 3622-25 (which we have held applicable here).” The statutes which the district court held to be' applicable and with which the Postal Service was obliged to comply would require a recommended decision by the Rate Commission approving the test plan. This appeal followed.

II

Congressional dissatisfaction with postal inefficiency reached a peak in 1970. It was [1373]*1373then that the Postal Service was established pursuant to the Reorganization Act. Congressional declarations of postal policy resulted in a direction that the Postal Service be “operated as a basic and fundamental service provided to the people . . . ” 39 U.S.C. § 101(a). At the same time, Congress commanded that “[p]ostal rates shall be established to apportion the costs of all postal operations to all users of the mail on a fair and equitable basis.” 39 U.S.C. § 101(d). In order to eliminate any effect of politics and special interest lobbying on rate-setting and mail classification, Congress completely delegated its rate-setting authority. The power to set rates of postage and to establish classes of mail was vested in the nine Presidentially appointed Governors3 of the Postal Service. That power, however, was limited to the extent that the Governors’ authority over rates and classifications could only be exercised after comprehensive review and recommendation by the Postal Rate Commission, the regulatory agency which Congress created to oversee the ratemaking and mail classification process.

The Postal Rate Commission is completely independent of the Postal Service. It is comprised of five Commissioners appointed by the President with the advice and consent of the Senate. 39 U.S.C.

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Bluebook (online)
604 F.2d 1370, 1979 U.S. App. LEXIS 12625, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-parcel-service-inc-a-new-york-corporation-and-united-parcel-ca3-1979.