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UPS v. USPS

July 19, 1978

UNITED PARCEL SERVICE, INC., a New York Corporation and United Parcel Service, Inc., an Ohio Corporation
v.
UNITED STATES POSTAL SERVICE



The opinion of the court was delivered by: BECKER

OPINION AND ORDER

I. Preliminary Statement

 This case raises the question whether the United States Postal Service may, without notice, hearing, or prior submission to the Postal Rate Commission, conduct limited and temporary experiments in which proposed new mail classifications, offered at heretofore unavailable rates, are tested in the marketplace or, conversely, whether the institution of such experimental postal services is subject to the procedures governing changes in permanent rates and classifications. *fn1" The question appears to be one of first impression.

 The United States Postal Service and the postal procedures at issue in the case at bar find their common genesis in the Postal Reorganization Act of 1970, Pub.L. 91-375, 84 Stat. 719 (codified at 39 U.S.C. §§ 101-5605) (hereinafter "Act"). Passage of the Act signalled a major change in the structure and accountability of the postal bureaucracy. Critics of the Post Office Department claimed that the Post Office was at once over-political and under-efficient, See generally H.R.Rep. No. 91-1104, 91st Cong., 2d Sess., Reprinted in (1970) U.S.Code Cong. & Admin.News, pp. 3649, 3651-54, 3660-61; S.Rep. No. 91-912, 91st Cong., 2d Sess. 1-3 (1970); President's Commission on Postal Organization, Towards Postal Excellence (1968), and that the Postmaster General was generally powerless to take the kind of extensive remedial action necessary to affect significantly the Department's all too apparent ills, See S.Rep., Supra, at 3. *fn2"

 Congressional response to these postal maladies was far-reaching. The Post Office was taken out of the Cabinet and established as the United States Postal Service, an independent unit of the executive branch. 39 U.S.C. § 201. Under the new system, the Postmaster General is no longer appointed by the President; rather, the President appoints the nine Governors of the Postal Service, no more than five of whom may be from the same political party. The Governors, who serve for rotating nine year terms, appoint the Postmaster General and Deputy Postmaster General and set the latters' tenure and compensation; the Governors and their two appointees become the Board of Governors of the Postal Service. Id. § 202.

 The Postal Reorganization Act gives to the Postal Service increased control of and responsibility for postal operations and management, free of the formal and direct supervision of the legislative and executive branches. Thus, the Postal Service is empowered to sue and be sued in its own name, to adopt rules and regulations, to enter into and perform contracts, to keep its own system of accounts, to acquire and dispose of property, etc. Id. § 401. To professionalize and depoliticize the Postal Service even further, a postal career service was established, Id. § 1001(a), provision was made for hiring executives, Id. § 1001(c), and otherwise upgrading postal management, Id. § 1004, and political recommendations on personnel matters were prohibited, Id. § 1002. As to employee-management matters, collective bargaining was made applicable to postal service employees, with provision for binding arbitration in the event of lack of agreement, Id. §§ 1202-1207, and postal employees were granted the right to work, Id. § 1209(c).

 Reform in the area of setting postal rates and classes was at least as thoroughgoing as the other reforms just referred to. Congress abandoned the business of postal ratemaking and established a quasi-regulatory agency, the bipartisan Postal Rate Commission. The Commission, which is independent of the Postal Service and the members of which serve for rotating six year terms, was given primary responsibility for overseeing changes in postal rates, classes, and services. Id. §§ 3601-3604. Although the Governors of the Postal Service are charged with the establishment of fair and equitable classes of mail and postal rates and fees, Id. § 3621, before instituting such rates or classes the Postal Service must request recommended decisions from the Postal Rate Commission, Id. §§ 3622 & 3623. The Commission is to hold evidentiary hearings under 5 U.S.C. §§ 556 & 557 (Administrative Procedure Act) pursuant to regulations that it may establish, 39 U.S.C. § 3624, to evaluate the proposed rates or classes of mail according to criteria established by Congress, Id. §§ 3622 & 3623. Upon receiving the recommended decision of the Commission, the Governors of the Postal Service may approve, allow under protest, reject, or modify the decision in accordance with specific statutory provisions. Id. § 3625. If no decision is forthcoming from the Commission within a specified period of time, the Postal Service may, upon ten days notice in the Federal Register, establish temporary changes in rates or classes in accordance with the proposed changes under consideration by the Commission. Id. § 3641. *fn3" Proposed changes in the nature of postal services that will generally affect service on a nationwide or substantially nationwide basis must also be submitted to the Commission for hearing and an advisory opinion before such changes may be instituted. Id. § 3661.

 Responding to its congressional mandate to "plan, develop, promote, and provide adequate and efficient postal services at fair and reasonable rates and fees," Id. § 403(a), in mid-October of 1977 the Postal Service instituted an experimental parcel delivery service that is scheduled to last approximately twelve months. Under this test program, which is not available to the public generally, about twenty selected shippers *fn4" in five metropolitan areas *fn5" entered into service agreements with the Postal Service. These agreements provide that parcels mailed by the test participants, when suitably packaged for bulk mail processing, *fn6" will be assessed postage based upon the average weight of such packages. For example and subject to the distance limitations set out in note 7 Infra regardless of the actual weight of any given package, if the average weight of the pieces tendered, based on sample weighings, is five pounds or less, postage for each parcel is $ .87; if the average weight of the packages is more than five but not more than twenty pounds, postage for each parcel is $ 1.15. These charges are significantly less than the generally available parcel post rates of the Postal Service. Further, the postage charges under the test program do not, for the most part, vary with distance, as they do under regular parcel post. *fn7" Participants in the program must provide a minimum volume of 50 pieces per mailing and 250 pieces per week. They also must present all parcels to the Postal Service in containers and cooperate with the Postal Service in data collection and research activities. *fn8"

 The plaintiffs, large nationwide providers of parcel delivery services that compete with the Postal Service's parcel post program and that would suffer adverse competitive impact were the current Postal Service test instituted on a permanent and systemwide basis, *fn9" contend that the Postal Service's experiment is in violation of the policy and procedures established by the Postal Reorganization Act. Although the particular experiment at issue in this case poses a relatively small threat to plaintiffs, See notes 9 Supra & 11 Infra, the plaintiffs fear that other less restricted experiments will be deleterious. Choosing to strike before significant harm is done rather than after, they attack the precedent of marketplace experiment sans Rate Commission approval which the Service Test Plan establishes. The primary focus of this attack on the Service Test Plan is grounded on the procedures mandated by 39 U.S.C. §§ 3622-3624 for rate and mail classification changes. *fn10" Plaintiffs contend that, insofar as the test takes place in the marketplace, because the rates charged to participants in the experiment are previously unavailable rates and because the plan represents a new class of mail, the Postal Service is required to submit the plan to the Postal Rate Commission and await the Commission's recommended decision before instituting the test. Plaintiffs argue that the Postal Service may not lawfully circumvent the statutorily required procedures for postal rate and classification changes merely by unilaterally denominating the changes "experimental." Since the statutory procedures, which contain no exceptions for market "experiments," were not followed, plaintiffs argue that the Service Test Plan should be enjoined. *fn11"

 The Postal Service rejoins that, although the procedures cited by plaintiffs would indeed be applicable if the Service Test Plan were instituted on a permanent and systemwide basis, those procedures are not triggered where, as here, a reasonable, limited, and temporary experiment is conducted as a research and development activity pursuant to the Postal Service's duty to "plan (and) develop . . . adequate and efficient postal services." 39 U.S.C. § 403(a). The experiment, the Postal Service maintains, is designed to assist the Service in determining what, if any, rate and/or classification changes it should make in order to better utilize the Bulk Mail System, and is not itself such a change.

 For reasons that will at length appear, although we believe that as a matter of pure policy the result advocated by the Postal Service is more desirable, construction of the statute compels the conclusion that the plaintiffs must prevail and that continuation of the "experimental" parcel delivery service at issue must be enjoined.

 II. Discussion A. The Statutory Language; Some General Principles of Statutory Construction and the Principle of "Plain Meaning"

 We begin our inquiry by focusing on the statutory language that governs the Postal Service's submission of changes in rates and classifications to the Postal Rate Commission. Section 3622(a) of the Postal Reorganization Act provides:

 
From time to time the Postal Service shall request the Postal Rate Commission to submit a recommended decision on changes in a rate or rates of postage or in a fee or fees for postal services if the Postal Service determines that such changes would be in the public interest and in accordance with the policies of this title. The Postal Service may submit such suggestions for rate adjustments as it deems suitable.

 39 U.S.C. § 3622(a). Similarly, the next section provides:

 
Following the establishment of (an initial) mail classification schedule . . . the Postal Service may from time to time request that the Commission submit, or the Commission may submit to the Governors on its own initiative, a recommended decision on changes in the mail classification schedule.

 Id. § 3623(b).

 Our objective as we seek to determine the meaning to be given this statutory language is, of course, to give effect to the congressional intent. Philbrook v. Glodgett, 421 U.S. 707, 713, 95 S. Ct. 1893, 44 L. Ed. 2d 525 (1975). We think it reasonable to assume that in expressing its intent through the Postal Reorganization Act, Congress sought clarity rather than obfuscation and, unless the contrary appears, that Congress therefore used statutory words in their ordinary and usual sense and with the meaning commonly attributed to them. Caminetti v. United States, 242 U.S. 470, 485-86, 37 S. Ct. 192, 61 L. Ed. 442 (1917); Institute for Scientific Information, Inc. v. United States Postal Service, 555 F.2d 128, 131 (3d Cir. 1977).

 Reading the statute according to this general principle, there does not on the surface appear to be anything inherently difficult or ambiguous about the language involved. The common meaning of a "rate of postage" is simply the fee the Postal Service charges for processing, transporting, and delivering a particular type of mail. Similarly, the ordinary understanding of a mail classification is nothing more complex than a grouping of mail based on established and shared criteria. See National Retired Teachers Ass'n v. United States Postal Service, 430 F. Supp. 141, 146 (D.D.C.1977). The usual interpretation of "change" is alteration or making different. Although the Postal Service argues vigorously that, in the context of Postal Rate Commission supervision, "changes" in "rates of postage" and "mail classifications" signifies only permanent and systemwide rate and classification changes rather than the limited experimental adjustments in rates and classifications at issue in the instant case, the statute itself does not at any point set out or specifically allude to any exceptions to the general scheme, *fn12" nor do the particular provisions on which we have focused expressly limit their applicability to changes of a nationwide, systemwide, or permanent scope. On the face of the statute, therefore, there appears no reason to restrict the ordinary and usual scope of the statutory terms, which, we think, would generally be read to include any change in rates or classifications.

 Turning our attention to the particular actions of the Postal Service that are challenged in this case, there can be no doubt that the Postal Service's experiment does involve rates of postage and classifications of mail within the ordinary meaning of those terms. Fees are being paid to the Postal Service to transport and deliver a certain type of mail that is grouped according to established and shared criteria. Indeed, as we have already observed, the Postal Service concedes that the very changes at issue would have to be submitted to the Postal Rate Commission pursuant to §§ 3622 and 3623 were these innovations permanent and systemwide. Further, it is clear that as to the twenty participants in the Service Test Plan, postal rates and mail classifications have in fact been changed, for the participating shippers now mail their packages under previously unavailable rates as part of a previously nonexistent class of mail. So stated, where the "experiment" does not consist of mock packages mailed at hypothetical rates but instead requires the payment of real postage by real shippers for real parcel post service, there have been changes, however limited, in rates of postage and classifications of mail that affect these shippers and that fall within a "plain meaning" reading of the statutory language.

 There is a possible counterpoint to our "plain meaning" analysis, which can be constructed by analogy to 39 U.S.C. § 3661; *fn13" that is, by comparing, in the postal context, rate, classification, and service changes. *fn14" When one thinks of a rate or classification change, the argument goes, one naturally tends to think in systemwide terms; I. e., when one thinks of a change in the rates, for example, of parcel post, it is the more "common" understanding that such a change would be across the board, and not a change affecting only twenty mailers and only for a predetermined length of time. The "common" or "ordinary" conception of a classification change might be said to be similar. In the case of a Service change, however, the argument continues, one might more naturally think in less sweeping terms. To be sure, a service change could be systemwide. But it commonly also could be purely local for example, the decision to discontinue home delivery in a single town when the mailboxes are moved farther away from the curb. Grover City v. United States Postal Service, 391 F. Supp. 982 (C.D.Cal.1975). See also Bradley v. United States Postal Service, 554 F.2d 186 (5th Cir. 1977) (decision to discontinue door-to-door delivery in one town not a service change of nationwide or substantially nationwide scope); Martin v. Sloan, 432 F. Supp. 616 (W.D.N.C.1977) (consolidation of two rural postal routes not a service change of nationwide or substantially nationwide scope). Thus, in § 3661 Congress had to modify the ambiguous "plain meaning" of a "service change" to make it clear that Postal Rate Commission involvement was to be only in the broader, systemwide situation. Under this theory, no such modification of the plain meaning of rate or classification changes was necessary in § 3622 or § 3623 because the ordinary usage of such terms already includes a "systemwide" component, but modification Would have been necessary to expand Rate Commission jurisdiction to the less-than-systemwide situation. The argument concludes that the plain meaning reflects, consistent with § 3661, a congressional desire to reserve Rate Commission review for the "big" case.

 The effect of the foregoing argument, if successful, would be to reverse the presumption under which we otherwise would be laboring. For, if the "plain meaning" of the statute is as we initially articulated it, it is incumbent on the Postal Service to demonstrate that imputing such a meaning to the words of the Act would be unreasonable in terms of the Act's purpose and structure. See Discussion Infra. If, however, the "plain meaning" is as the Postal Service posits it to be, the presumption reverses and it becomes the burden of the plaintiff to show unreasonableness.

 Although the Postal Service's argument has some appeal, we ultimately are unconvinced by it. There is nothing "plainer" than the fact that postal rates and classifications have been changed as to the participants in the Service Test Plan. When the rates and classifications applicable to certain users of the Postal Service have in fact been changed, we find it both conceptually and linguistically bizarre to say that although certain postal rates and classifications have been changed, there has not been a change in the rates or classification of postage. We do not say that such a statutory definition is impossible; the ultimate length of this opinion is testimony to its possibility. We Do, however, say that it strains "plain meaning" to impose such a definition on the language as a presumptive matter.

 Moreover, this argument ultimately hinges on the assumption that Congress wanted the approach to rate, classification, and service changes to be identical vis-a-vis Rate Commission involvement. Congress' linguistically different treatment of the different kinds of changes, however, may well indicate that the changes were thought of in different categories because, for example, of the different areas of expertise of the Postal Service (service management) and the Postal Rate Commission (ratemaking). See National Association of Greeting Card Publishers v. United States Postal Service, 186 U.S.App.D.C. 331, 358, 569 F.2d 570, 597 (1976) (hereinafter "NAGCP"). Thus, comparing rate changes and service changes is like comparing apples and oranges. Even without drawing an inference adverse to the Postal Service from § 3661, we therefore are unable to employ § 3661 to provide a restrictive gloss on the facially comprehensive language of §§ 3622 and 3623.

 Rather than lowering the curtain on our inquiry into the meaning of the statute, however, we think that the foregoing actually only sets the stage for further analysis. Although it is received wisdom that when a statute's plain meaning is clear "the duty of interpretation does not arise and the rules which are to aid doubtful meanings need no discussion," Caminetti v. United States, supra, 242 U.S. at 485, 37 S. Ct. at 194, it is also an endorsed caveat to this rule that "(w)hether or not the words of a statute are clear is itself not always clear." Barbee v. United States, 392 F.2d 532, 535 n.4 (5th Cir. 1968). Thus, what might appear to be the plain meaning must yield if it is inequitable, unreasonable in context, or manifestly contrary to the statutory purpose or legislative intent. See, e.g., Center for National Policy on Race and Urban Issues v. Weinberger, 163 U.S.App.D.C. 368, 372, 502 F.2d 370, 374 (1974). Our goal, after all, is to vindicate Congress' intent, and we therefore must read statutory language as Congress used it which may or may not be precisely as Webster defined it. In order to determine whether the "plain meaning" of a particular provision is in fact unreasonable in light of the totality of the statute, the statutory purpose, or the legislative intent, a court must in the first instance engage in at least some measure of further statutory analysis. See 2A Sands, Statutes and Statutory Construction §§ 46.02.04 (4th ed.) Additionally, since the terms with which we are concerned are used in the Postal Reorganization Act against the particular background of regulatory ...


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