American Postal Workers Union v. React Postal Services, Inc., s. 84-2334

• Decision Date: 19 August 1985
• Docket Number: Nos. 84-2334,84-2372,s. 84-2334
• Citation: 771 F.2d 1375
• Parties: AMERICAN POSTAL WORKERS UNION, Plaintiff-Appellee, v. REACT POSTAL SERVICES, INC., Mountain Bell Telephone Company and United States Postal Service, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1375

771 F.2d 1375

AMERICAN POSTAL WORKERS UNION, Plaintiff-Appellee, v. REACT POSTAL SERVICES, INC., Mountain Bell Telephone Company and United States Postal Service, Defendants-Appellants.

Nos. 84-2334, 84-2372.

United States Court of Appeals Tenth Circuit.

Aug. 19, 1985.

Anton G. Hajjar of O'Donnell, Schwartz and Anderson, Washington, D.C., for the plaintiff-appellee.

Walter P. Faber, Jr., (David J. Hodgson with him on brief) of Watkins & Faber, Salt Lake City Utah, for defendants-appellants React Postal Services, Inc., and Mountain Bell Telephone Co.

Harold J. Hughes, Deputy Gen. Counsel, Washington, D.C. (Charles D. Hawley, Asst. Gen. Counsel and Michael T. Tidwell, Atty., U.S. Postal Service, Washington, D.C., with him on the briefs) for defendant-appellant, U.S. Postal Service.

Before BARRETT, MOORE and TIMBERS ^*, Circuit Judges.

BARRETT, Circuit Judge.

React Postal Services, Inc. (React) and the United States Postal Service (USPS) appeal an injunction barring React from conducting business as a presort letter mailing firm. At all pertinent times, React has collected the mail of its customers and clients at its various collection boxes in the Salt Lake City metropolitan area, presorted that mail, and presented the mail at the nearest USPS post office with postage affixed at USPS discount rates. A specific description of React's operation follows:

Background

Phase I

In April, 1982, React installed letter collection boxes in 114 7-Eleven stores in the greater Salt Lake City metropolitan area. These boxes contained three slots. The first slot was for bill payments to Mountain Bell. Customers would affix a 10-cent React decal to these letters addressed to Mountain Bell. (Mountain Bell paid React 12 cents for each of these bill payments). The second slot was for in-state mail; the React decal for this category cost 18 3/4 cents (4 for 75 cents). The third slot was for out-of-state mail; the React decal for this category cost 20 cents. R. at 380. At all pertinent times, the regular USPS First-Class Mail rate for all three of these categories of mail was 20 cents ¹. Thus, the customer saved money by using React's services for Mountain Bell bill payments and in-state mail.

React carried its customers' letters from its letter collection boxes to a central place of business in Salt Lake City. At this central location, postage was affixed by postage meter to each letter, the amount of postage depending on whether the letter qualified for the Presort First-Class Mail ², Carrier Route First-Class Mail ³, or regular First-Class Mail rate of postage. Also processed at the React facility were letters from React's regular business clients. On May 24, 1982, the USPS Law Department issued Advisory Opinion PES 82-8, which concluded that React's Phase I operation was not in violation of applicable statutes and regulations. R. at 207.

Phase II

In May, 1983, React's letter collection boxes were relocated from the 7-Eleven stores to 26 Smith's Food King Stores. The boxes were changed to permit collection of bill payments addressed to Mountain Fuel, Utah Power & Light, and Mountain Bell. React decal prices remained the same. During this phase of the operation, customers' bill payments addressed to Mountain Bell and Mountain Fuel were aggregated by React into Express Mail pouches addressed to the respective utility companies. The pouches were sealed and weighed, and postage was affixed at the rate prescribed for Express Mail Custom-Designed Service ⁴. Such rate was based on the weight of the pouch. R. at 382. These pouches were then picked up at the post office by an employee of the respective utility companies. Letters addressed to Utah Power & Light were also aggregated into Express Mail pouches. As with the other Express Mail pouches, proper postage was affixed and the pouches were taken to the post office, where a USPS employee would verify weight and postage. The React employee would then act as Utah Power & Light's agent and carry the pouch directly from the post office to Utah Power & Light's offices at 1407 West North Temple in Salt Lake City.

Phase III

On July 8, 1983, the Governors of the Postal Service followed a recommendation from the Postal Rate Commission and amended the "aggregation of letters" rule appearing at Sec. 381.3 of the Domestic Mail Manual ⁵. The rule had previously prohibited the aggregation of multiple letters addressed to a common addressee into a larger packet (except, of course, when aggregation was pursuant to an Express Mail Custom-Designed Service Agreement). See R. at 205 (text of old Sec. 381.3). The amended rule provides that two or more persons having letters addressed to a mutual addressee may aggregate these letters into a single package and pay First-Class postage on the entire package. Thus, postage need no longer be paid on each individual piece of First-Class Mail. The aggregation may be performed either by the senders themselves or by their agent. (Still prohibited, however, would be the practice of aggregating letters addressed to different addressees into a single package, where the package addressee might deliver the individual letters to their ultimate destinations). Domestic Mail Manual Issue 13 Sec. 381.3 (text of amended rule); R. at 642.

React's response to this rule change was to discontinue its use of Express Mail Custom-Designed Service and begin using regular First-Class Mail for its aggregate packages weighing less than 12 ounces and Zone-Rated (Priority) Mail ⁶ for its packages weighing more than 12 ounces. React's costs for mailing its customers' utility bill payments were decreased still further when this practice was adopted.

Litigation History

The American Postal Workers Union (APWU) brought this action against React, alleging that React's business operations constituted an unlawful intrusion into the USPS' historic monopoly of postal services. Specifically, APWU alleged that React was violating two of the Private Express Statutes ⁷. The Private Express Statutes, codified at 18 U.S.C. Secs. 1693-1699 and 1724 (1982) and 39 U.S.C. Secs. 601-606 (1982), delineate the USPS' monopoly and protect it by prohibiting private competition within the boundaries of the monopoly. APWU's contention was that React's operation constituted an unlawful rival post office in that React was performing the collection and sorting tasks properly performed only by USPS employees (such employees being APWU members) and thereby accomplishing the delivery of mail at artificially low rates.

The USPS was not originally a party to this action, but on motion of React was found by the court to be a necessary party defendant. R. at 11. Discovery was conducted, and the parties stipulated to all pertinent facts. R. at 375-90. In response to cross-motions for summary judgment, the trial court on July 31, 1984, granted judgment in favor of the APWU and enjoined React from engaging in the collection, carriage and sortation of mail. R. at 269-770. The injunction was subsequently stayed pending appeal. R. at 797-98.

In its Memorandum Opinion, the trial court addressed itself to the following language of 18 U.S.C. Sec. 1696(a) (1982):

This section shall not prohibit any person from receiving and delivering to the nearest post office, postal car, or other authorized depository for mail matter any mail matter properly stamped.

The court found that the phrase "properly stamped" meant that individual letters must have "the proper postage affixed to them at the time the messenger picked them up " R. at 764 (emphasis in original). Since React did not affix postage until after the letters had left the possession of the senders, the court found a violation of Section 1696(a). The court also found that React did not come within the exception of 39 U.S.C. Sec. 601(a)(2) (1982) because each letter, although affixed with postage at discount rates, was not affixed with the full amount of postage that would have been required had the sender/customer mailed the letter individually.

The trial court then examined the regulation at 39 C.F.R. Sec. 310.3 (1984) ⁸, and found that "React's operation separates and consolidates letters according to addressee," and such separation and consolidation were explicitly outside the Section 310.3(e) "carriage prior or subsequent to mailing" exception.

In response to React's contention that the USPS' new aggregation rule specifically permitted React's Phase III operation, the court found that the plain meaning of the Private Express Statutes embodied a Congressional decision to grant the USPS a monopoly that could not be overturned by a mere administrative ratemaking action.

The appellants React and USPS take issue with each of these trial court findings. Their position is that React's operation is permitted by 18 U.S.C. Sec. 1696(a) (1982) and accompanying interpretive regulations in that the operation qualifies as a "carriage prior or subsequent to mailing" exception to the general statutory prohibition of private express companies. 39 U.S.C. Sec. 601 (1982) then, would be irrelevant because React need only to qualify under any one statutory exception in order to be within the law.

Jurisdiction

Before we address the merits, we must resolve a preliminary jurisdictional question. The appellants contend that jurisdiction was lacking in the trial court because the APWU has no standing to enforce the Private Express Statutes, and (2) there is no jurisdiction in equity to enjoin the violation of a criminal statute. These contentions are without merit. In National Association of Letter Carriers, AFL-CIO v. Independent Postal System of America, Inc., 470 F.2d 265 (10th Cir.1972), we held that a postal workers' union has the requisite "injury in fact" and is within the Private Express Statutes' "zone of interest." Therefore, such a union does have standing to seek an injunction to enforce the Private Express Statutes. That conclusion was based on the...