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UPS Worldwide Forwarding, Inc. v. U.S. Postal Service

September 15, 1995




On Appeal from the United States District Court for the District of Delaware (D.C. Civil Action No. 93-cv-00340)

Before: BECKER, SCIRICA, and WOOD *fn*, Circuit Judges

SCIRICA, Circuit Judge.

Argued March 10, 1995

Filed September 15, 1995)


In this case, UPS Worldwide Forwarding seeks to prevent the United States Postal Service from implementing a new service for customers that ship significant quantities of international mail. In response, the Postal Service attacks UPS's standing to bring suit. The district court determined that UPS had standing but that the Postal Service exceeded its authority in promulgating the new program. We will reverse.


In July 1992, the Postal Service announced the creation, on an interim basis, of an International Customized Mail ("ICM") service. See 57 Fed. Reg. 30651 (1992). Despite protests from UPS, a large delivery company that competes with the Postal Service, the Postal Service adopted the ICM program on a permanent basis in May 1993. See 58 Fed. Reg. 29778 (1993).

Under the ICM service, qualifying international mailers negotiate individualized service agreements with the Postal Service to establish the kind of services to be provided and the rate of postage. To qualify for the service, international mailers must be capable, on an annual basis, of mailing at least one million pounds of international mail or paying at least two million dollars in international postage. Id.

Two months after publication of the permanent regulation, UPS filed suit in the District of Delaware, alleging the ICM service violated several provisions of the Postal Reorganization Act ("PRA"), Pub. L. No. 91-375, 84 Stat. 719 (1970) (codified at 39 U.S.C. 101-6440). The Postal Service disagreed, claiming that its promulgation of the ICM regulation did not exceed its statutory authority. The Postal Service also contended that UPS lacked standing to file the action. Air Courier Conference of America/International Committee ("ACCA"), an unincorporated association of firms engaged in letter and parcel delivery services, then filed a motion to intervene.

Subsequently, the district court granted UPS's motion for summary judgment. UPS Worldwide Forwarding, Inc. v. United States Postal Serv., 853 F. Supp. 800 (D. Del. 1994). First, the court held that UPS had standing to challenge the Postal Service program. Id. at 804. Second, the court found the ICM service violated several sections of the PRA, codified at 39 U.S.C. Section(s) 101(d), *fn1 403(b)-(c), *fn2 and 407(a) *fn3 (1988), and issued an injunction barring the Postal Service from operating the program. Id. at 804-07. Finally, the court granted ACCA's motion to intervene. Id. at 806-07. The Postal Service appealed.

The district court had jurisdiction under 28 U.S.C. Section(s) 1331 and 1339 (1988) and 39 U.S.C. Section(s) 409(a) (1988). We have jurisdiction under 28 U.S.C. Section(s) 1291 (1988). Our review of these issues of standing and statutory construction is plenary. See Polychrome Int'l Corp. v. Krigger, 5 F.3d 1522, 1530 n.19 (3d Cir. 1993) ("We have plenary review of the district court's judgment on standing."); Resolution Trust Corp. v. Cityfed Fin. Corp., 57 F.3d 1231, 1237 (3d Cir. 1995) ("Our review of the construction of federal statutes is plenary.").


Before addressing standing and the merits, we consider the history of the statutory sections and regulations at the core of this dispute. This review takes us back more than two hundred years.

In 1789, the First Congress established a Post Office and provided for the appointment of a Postmaster General. See Act of Sept. 22, 1789, ch. 16, 1 Stat. 70; National Ass'n of Greeting Card Publishers v. United States Postal Serv., 462 U.S. 810, 813 (1983). Three years later, Congress approved a statute that "established basic mail rates, granted the Post Office Department a monopoly on mail delivery and authorized the creation of post roads." See Joseph W. Belluck, Increasing Citizen Participation in U.S. Postal Service Policy Making, 42 Buff. L. Rev. 253, 257 (1994); see also Act of Feb. 20, 1792, ch. 7, 1 Stat. 232. Under this Act, Congress set the rates not only for domestic mail, but also for letters and parcels sent abroad. Id. Section(s) 26, 1 Stat. at 239.

In 1825 and 1827, Congress passed laws prohibiting the private carriage of letters via stage, boat, horseback, or on foot, thereby "target[ing] transportation of mail which even then was contracted out to private carriers." Air Courier Conference of America v. American Postal Workers Union, 498 U.S. 517, 526 (1991). In the 1825 statute, Congress once again set the rate for domestic and international mail. See Act of Mar. 3, 1825, ch. 64, Section(s) 13, 34, 4 Stat. 102, 105, 112.

Despite the prohibitions on private carriers of mail, "high postal rates enabled private expresses to make substantial inroads into the domestic market for delivery of letters and the 1825 and 1827 Acts proved unsuccessful in prosecuting them." Air Courier Conference, 498 U.S. at 526. In response, Congress passed a series of laws between 1845 and 1851 reducing postage rates. Belluck, supra, at 258. Congress believed the 1845 Act, which strengthened the postal monopoly and reduced rates, "would have the dual virtues of driving private expresses out of business and increasing mail volume of the Post Office." Air Courier Conference, 498 U.S. at 527 (citing Act of Mar. 3, 1845, 5 Stat. 732). The 1851 Act continued the trend of reducing rates, but for the first time permitted those international rates set by Congress to be changed via "postal treaty or convention already concluded or hereafter to be made." See Act. of Mar. 3, 1851, ch. 20, Section(s) 1, 9 Stat. 587, 588. The Act also provided:

[T]he Postmaster General, by and with the advice and consent of the President of the United States, shall be, and he hereby is, authorized to reduce or enlarge, from time to time, the rates of postage upon all letters and other mailable matter conveyed between the United States and any foreign country, for the purpose of making better postal arrangements with other governments, or counteracting any adverse measures affecting our postal intercourse with foreign countries . . . . Id. Section(s) 2, 9 Stat. at 589.

In 1872, Congress combined into one statutory section the authority of the Postmaster General to negotiate postal treaties and change international rates. See Act of June 8, 1872, ch. 335, Section(s) 167, 17 Stat. 283, 304 ("[T]he Postmaster General, by and with the advice and consent of the President, may negotiate and conclude postal treaties or conventions, and may reduce or increase the rates of postage on mail matter conveyed between the United States and foreign countries.").

Although technology advanced rapidly over the next century, the organization of postal services remained largely unchanged. Congress continued to set domestic mail rates, see 39 U.S.C. chs. 51-69 (1964), and the Postmaster General retained the authority to change international rates, with the advice and consent of the President. Id. Section(s) 505. Congress also maintained the Post Office monopoly over mail delivery in an effort to keep revenues high and mailing costs low. Air Courier Conference, 498 U.S. at 527-28.

By 1970, however, the Post Office "faced a major financial crisis" that resulted in significant backlogs of mail and postal worker strikes. Belluck, supra, at 262, 265. Congress responded by passing the Postal Reorganization Act, an overhaul of the entire postal system that represented "a dramatic break with the past." See Mail Order Ass'n of America v. United States Postal Serv., 986 F.2d 509, 512 (D.C. Cir. 1993); see also H.R. No. 1104, 91st Cong., 2d Sess. (1970), reprinted in 1970 U.S.C.C.A.N. 3649, 3651-52.

The PRA "abolished the Post Office Department, which since 1789 had administered the Nation's mails," and replaced it with the United States Postal Service, an independent agency within the executive branch. National Ass'n of Greeting Card Publishers, 462 U.S. at 813. The Act divested Congress of control over postal rates, id., with domestic rates set through a complex process involving the Postal Service, Postal Rate Commission, and Governors of the Postal Service, and international rates set by "[t]he Postal Service, with the consent of the President." Air Courier Conference of America v. United States Postal Serv., 959 F.2d 1213, 1216-23 (3d Cir. 1992) (quoting 39 U.S.C. 407(a)). Congress also ordered the Postal Service to become selfsustaining, generating enough revenue to cover its expenses, thereby "launching 'the Postal Service into the commercial world.'" Loeffler v. Frank, 486 U.S. 549, 556 (1988) (quoting Franchise Tax Bd. v. United States Postal Serv., 467 U.S. 512, 520 (1984)); see also H.R. No. 1104, 91st Cong., 2d Sess., reprinted in 1970 U.S.C.C.A.N. at 3665. At the same time, the Act generally required fairness and forbade undue discrimination or preferences in the establishment of postal rates and services. See 39 U.S.C. Section(s) 101(d), 403(c).

The PRA continued the Postal Service's statutory monopoly "over the carriage of letters in and from the United States," see Air Courier Conference, 498 U.S. at 519 (citing 18 U.S.C. Section(s) 1693-1699 and 39 U.S.C. Section(s) 601-606), but it permitted the Postal Service to suspend its monopoly "where the public interest requires." Id. (citing 39 U.S.C. Section(s) 601(b)). In 1979, the Postal Service suspended its monopoly over "extremely urgent letters" sent within the United States and abroad, thus allowing private couriers such as UPS to compete with it in the overnight delivery of letters. See id. (citing 39 C.F.R. Section(s) 320.6). In 1986, it went further by generally suspending its monopoly over mail sent abroad. See id. at 519-20; see also 39 C.F.R. Section(s) 320.8. *fn4


Article III of the Constitution restricts the "judicial power" of the United States to the resolution of "cases" and "controversies." See Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 471 (1982). Subsumed within this restriction is the requirement that "a litigant have 'standing' to challenge the action sought to be adjudicated in the lawsuit." Id. Standing has constitutional and prudential components, both of which must be satisfied before a litigant may seek redress in the federal courts. Id.; Wheeler v. Travelers Ins. Co., 22 F.3d 534, 537 (3d Cir. 1994).


Earlier this year, the Supreme Court reiterated the three elements necessary to satisfy "the irreducible constitutional minimum of standing":

First, the plaintiff must have suffered an 'injury in fact' -- an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical. Second, there must be a causal connection between the injury and the conduct complained of . . . . Third, it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision. United States v. Hays, 115 S. Ct. 2431, 2435 (1995) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)).

In this case, there is no dispute that UPS meets the constitutional standing requirements. First, as a competitor of the Postal Service with authority to compete in the international parcel delivery market, *fn5 UPS stands to lose clientele lured to the Postal Service by the ICM service. Although UPS may not have demonstrated any lost business yet, the "injury in fact" component of standing merely requires that such injury be "imminent." Id.; see also Schering Corp. v. FDA, 51 F.3d 390, 395 (3d Cir. 1995) (noting that "threatened injury" suffices for Article III standing). Second, the requisite "causal connection" between UPS's injuries and the Postal Service's conduct is clear; in fact, the Postal Service created the ICM program with the express purpose of "attract[ing] customers that currently use its competitors and [that] would not otherwise use the Postal Service for their international mailings. If the Postal Service is successful, the additional volume will come from competitors, not from the Postal Service's other international services." 58 Fed. Reg. 29778, 29780. Finally, a decision favorable to UPS will undoubtedly redress its injuries. If we uphold the district court's decision for UPS, the Postal Service will not be able to implement the ICM service, and UPS cannot lose customers to a program that does not exist.


In addition to the Article III standing requirements, federal courts have developed prudential standing considerations "that are part of judicial self-government." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). These prudential standing rules require that:

(1) a litigant "assert his [or her] own legal interests rather than those of third parties," (2) courts "refrain from adjudicating 'abstract questions of wide public significance' which amount to 'generalized grievances,'" and (3) a litigant demonstrate that her interests are arguably within "the zone of interests" intended to be protected by the statute, rule or constitutional provision on which the claim is based. Wheeler v. Travelers Ins. Co., 22 F.3d 534, 538 (3d Cir. 1994) (citations omitted); see also Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 474-75 (1982). *fn6


The first step in satisfying prudential standing is for the litigant to demonstrate that it has asserted its "own legal interests rather than those of third parties." Wheeler, 22 F.3d at 538; see also Valley Forge, 454 U.S. at 474; Warth v. Seldin, 422 U.S. 490, 499 (1975). The Postal Service alleges that UPS does not meet this first requirement because it has sued under provisions of the PRA that purportedly exist to protect users of the mail, not competitors: "Because plaintiff does not claim to be injured as a mailer, it ...

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