Postal Service v. Flamingo Industries (Usa) Ltd.

• Decision Date: 25 February 2004
• Docket Number: No. 02-1290.,02-1290.
• Citation: 540 U.S. 736
• Parties: UNITED STATES POSTAL SERVICE <I>v.</I> FLAMINGO INDUSTRIES (USA) LTD. ET AL.
• Court: U.S. Supreme Court

540 U.S. 736

UNITED STATES POSTAL SERVICEv.

FLAMINGO INDUSTRIES (USA) LTD. ET AL.

No. 02-1290.

Supreme Court of United States.

Argued December 1, 2003.

Decided February 25, 2004.

After their contract to make mail sacks for the United States Postal Service was terminated, respondents brought this suit alleging, inter alia, that the Postal Service had sought to suppress competition and create a monopoly in mail sack production. The District Court dismissed the antitrust claims, concluding that the Postal Service is not subject to liability under federal antitrust law. The Ninth Circuit reversed, holding that the Postal Service can be liable but that it has a limited immunity from antitrust liability for conduct undertaken at Congress' command.

Held: The Postal Service is not subject to antitrust liability. In both form and function, it is not a separate antitrust person from the United States but is part of the Government, and so is not controlled by the antitrust laws. Pp. 739-748.

(a) The waiver of immunity from suit provided by the Postal Reorganization Act (PRA)—which gives the Postal Service the power "to sue and be sued in its official name," 39 U. S. C. § 401—does not suffice by its own terms to subject the Postal Service to liability under the Sherman Act. The two-step analysis of FDIC v. Meyer, 510 U. S. 471, 484, applies here. Meyer's first step is met because the PRA's sue-and-be-sued clause effects a waiver of sovereign immunity for actions against the Postal Service. However, Meyer's second step for finding liability— whether the Sherman Act's substantive prohibitions apply to the Postal Service—is not satisfied. The Sherman Act imposes liability on any "person," defined "to include corporations and associations existing under or authorized by the laws of ... the United States." 15 U. S. C. § 7. In holding that the United States is not a person authorized to bring a treble-damages claim for its own alleged antitrust injury under the Sherman Act, United States v. Cooper Corp., 312 U. S. 600, 606-607, this Court observed that, if the definition of "person" included the United States, the Government would be exposed to liability as an antitrust defendant, a result Congress could not have intended, id., at 607, 609. Although the antitrust statutes were later amended to allow the United States to bring antitrust suits, see 15 U. S. C. § 15a, Congress did not thereby change the statutory definition of "person." So, Cooper's conclusion that the United States is not an antitrust "person," in particular not a person who can be an antitrust defendant, was unaltered by Congress' action; indeed, the means Congress used to amend the antitrust law implicitly ratified Cooper's conclusion that the United States is not a proper antitrust defendant. Pp. 739-746.

(b) For purposes of the antitrust laws, the Postal Service is not a separate person from the United States. The PRA's designation of the Postal Service as an "independent establishment of the executive branch of the Government of the United States," 39 U. S. C. § 201, is not consistent with the idea that the Postal Service is an entity existing outside the Government. Indeed, the designation indicates just the contrary. The PRA gives the Postal Service a high degree of independence from other Government offices, but it remains part of the Government. The Sherman Act defines "person" to include corporations, 15 U. S. C. § 7, and had Congress chosen to create the Postal Service as a federal corporation, the Court would have to ask whether the Sherman Act's definition extends to the federal entity under this part of the definitional text. Congress, however, declined to create the Postal Service as a Government corporation, opting instead for an independent establishment. The choice of words likely was more informed than unconsidered, because Congress debated proposals to make the Postal Service a Government corporation before it enacted the PRA. Although the PRA refers explicitly to various federal statutes and specifies that the Postal Service is exempt from some and subject to others, 39 U. S. C. §§ 409-410, it makes no mention of the Sherman Act or the antitrust laws. This silence leads to no helpful inference one way or the other on the question at issue. However, the other considerations the Court has discussed lead to the conclusion that, absent an express congressional statement that the Postal Service can be sued for antitrust violations despite its status as an independent establishment of the Government, the PRA does not subject the Postal Service to antitrust liability. This conclusion is consistent with the nationwide, public responsibilities of the Postal Service, which has different goals from private corporations, the most important being that it does not seek profits, § 3621. It also has broader obligations, including the provision of universal mail delivery and free mail delivery to certain classes of persons, §§ 3201-3405, and, most recently, increased public responsibilities related to national security. Finally, the Postal Service has many powers more characteristic of Government than of private enterprise, including its state-conferred monopoly on mail delivery, § 601 et seq., and the powers of eminent domain and to conclude international postal agreements, §§ 401, 407. On the other hand, but in ways still relevant to the antitrust laws' nonapplicability, the Postal Service's powers are more limited than those of private businesses, since it lacks the power unilaterally to set prices or to close a post office, § 404. Its public characteristics and responsibilities indicate it should be treated under the antitrust laws as part of the Government, not a market participant separate from it. The fact that the Postal Service operates some nonpostal lines of business beyond the scope of its mail monopoly and universal service obligation does not alter this conclusion. Pp. 746-748.

302 F. 3d 985, reversed.

KENNEDY, J., delivered the opinion for a unanimous Court.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT.

Deputy Solicitor General Kneedler argued the cause for petitioner. With him on the briefs were Solicitor General Olson, Assistant Attorney General Keisler, Lisa S. Blatt, and Mark B. Stern.

Harold J. Krent argued the cause for respondents. With him on the brief were Angela Wah and George P. Eshoo.^*

JUSTICE KENNEDY delivered the opinion of the Court.

This case requires us to consider whether the United States Postal Service is subject to liability under the federal antitrust laws.

Flamingo Industries (USA) Ltd., a private corporation, and its owner and principal officer are the respondents here. Flamingo had been making mail sacks for the Postal Service, but then its contract was terminated. The respondents sued in United States District Court alleging that the Postal Service had sought to suppress competition and create a monopoly in mail sack production. (They also brought claims against the Postal Service under federal procurement law and state law, but those claims are not before us.) The District Court dismissed the antitrust claims, concluding that the Postal Service is not subject to liability under federal antitrust law. The Court of Appeals reversed. It held that the Postal Service can be liable but that it has a limited immunity from antitrust liability for conduct undertaken at the command of Congress. 302 F. 3d 985, 993 (CA9 2002). We granted certiorari to consider the question whether the United States Postal Service is a "person" amenable to suit under the controlling antitrust statute. 538 U. S. 1056 (2003). We hold it is not subject to antitrust liability, and we reverse.

After the Revolution, both the Articles of Confederation and the Constitution explicitly empowered the National Government to provide and regulate postal services. Article of Confederation IX; U. S. Const., Art. I, § 8. The importance of the enterprise was prefigured by the Continental Congress' appointment of Benjamin Franklin to be the first Postmaster General, on July 26, 1775. G. Cullinan, The United States Postal Service 26 (1973) (hereinafter Cullinan). From those beginnings, the Postal Service has become "the nation's oldest and largest public business." J. Tierney, Postal Reorganization: Managing the Public's Business vii (1981) (hereinafter Tierney).

During its history since Postmaster Franklin, the postal organization has been reorganized or restructured at various times. In the immediate period after ratification of the Constitution, it was called the General Post Office and was subordinate to the Treasury Department. Cullinan 35-36. In 1825, its name changed from the General Post Office to the Post Office Department, an alteration accomplished by somewhat informal means when Postmaster Joseph McLean simply changed the title on official letterhead. McLean also began the practice of reporting directly to the President rather than to the Secretary of the Treasury. Id., at 50-51. (McLean was a popular Postmaster who served from 1823 until 1829, when the incoming President Andrew Jackson solved his worries about McLean's independence in matters of postal governance, especially patronage, by appointing him to this Court. Id., at 52.) In 1829, President Jackson acknowledged the enhanced status of the Postmaster General by making him a member of the Cabinet, though it was not until 1872 that Congress formally recognized the Post Office Department as an executive department of the Federal Government. Id., at 36. A more complete account of the origins and mission of the postal system is set forth in Postal Service v. Council of Greenburgh Civic Assns., 453 U. S. 114, 120-126 (1981).

Major change came with the Postal Reorganization Act of 1970 (PRA), 39 U. S. C. § 101 et seq. It was adopted to increase the efficiency of the Postal Service and reduce political influences on its operations. Tierney 1-26; Cullinan...