ASCOM Hasler Mailing Sys., Inc. v. United States Postal Serv.
| Decision Date | 30 September 2011 |
| Docket Number | 00–2089(PLF).,Civil Action Nos. 00–1401 (PLF) |
| Citation | 815 F.Supp.2d 148 |
| Parties | ASCOM HASLER MAILING SYSTEMS, INC., Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.Neopost, Inc., Plaintiff, v. United States Postal Service, Defendant. |
| Court | U.S. District Court — District of Columbia |
OPINION TEXT STARTS HERE
Michelle Loser Schaefer, Syma Mirza, DLA Piper LLP, Washington, DC, for Plaintiff.
Carl Ezekiel Ross, Darrell C. Valdez, U.S. Attorney's Office, Washington, DC, for Defendant.
These consolidated cases are before the Court on the parties' objections to the report and recommendation of Magistrate Judge John M. Facciola dated February 3, 2011. In that report and recommendation, Magistrate Judge Facciola recommended (1) that plaintiffs' motion for summary judgment be granted on plaintiffs' contract claim and that defendant's motion for summary judgment be denied on that claim; (2) that defendant's motion to dismiss and the parties' cross-motions for summary judgment be denied as moot on plaintiffs' remaining claims; and (3) that defendant's motion to strike certain affidavits submitted in support of plaintiffs' motion for summary judgment be denied as moot. See Ascom Hasler Mailing Sys. Inc. v. USPS (“ R & R”), Civil Action Nos. 00–1401 & 00–2089, 2011 WL 1044480, at *5 (D.D.C. Feb. 3, 2011).
Rule 72(b) of the Federal Rules of Civil Procedure authorizes the referral of dispositive motions to a magistrate judge for a report and recommendation. When a party files written objections to any part of the magistrate judge's recommendation, the Court considers de novo those portions of the recommendation to which objections have been made, and “may accept, reject, or modify the recommended decision; receive further evidence; or return the matter to the magistrate judge.” Fed.R.Civ.P. 72(b)(3). The parties each have filed objections to Magistrate Judge Facciola's report and recommendation, and briefing on those objections now is complete. Upon consideration of the parties' papers, the relevant legal authorities, and the entire record in this case, the Court will reject Magistrate Judge Facciola's recommendations; will deny in part, deny as moot in part, and grant in part defendant's motion to dismiss; will deny defendant's motion to strike; and will deny the parties' cross- motions for summary judgment.1
Magistrate Judge Facciola previously has described the factual and procedural background on this case. See, e.g., R & R, 2011 WL 1044480, at *1–2; see also Ascom Hasler Mailing Sys., Inc. v. USPS, Civil Action Nos. 00–1401 & 00–2089, 2010 WL 4116858, at *1 (D.D.C. Oct. 19, 2010); Ascom Hasler Mailing Sys., Inc. v. USPS, Civil Action Nos. 00–1401 & 00–2089, 2007 WL 724896, at *1–2 (D.D.C.2007). The Court therefore will limit its discussion accordingly and will draw largely from Magistrate Judge Facciola's prior decisions.
In the 1960s, Pitney Bowes invented and patented the Computerized Remote Meter Resetting System (“CMRS”). R & R, 2011 WL 1044480, at *1. Marketed to the public under the trade name “Postage by Phone,” this CMRS system “permits customers to use their phones to purchase more postage [for their postage meter] without having to take the meter to the nearest post office to have it reset.” Ascom Hasler Mailing Sys., Inc. v. USPS, 2007 WL 724896, at *1.
In 1978, defendant, the United States Postal Service (“USPS”), and Pitney Bowes entered into a Statement of Understanding (“SOU”) that gave Pitney Bowes the right to operate the new CMRS system. R & R, 2011 WL 1044480, at *1. Later, USPS authorized plaintiffs Ascom Hasler Mailing Systems, Inc. (“Ascom”) and Neopost, Inc., corporations that are competitors of Pitney Bowes, to operate their own version of this CMRS system as well. Id.2
Under the CMRS system, “customers advanced payments for postage” to meter resetting companies like Pitney Bowes, Ascom, and Neopost. Ascom Hasler Mailing Sys., Inc. v. USPS, 2007 WL 724896, at *1. As a result, this CMRS system provided a significant financial advantage to these meter resetting companies. See id. As Magistrate Judge Facciola explained:
[Customers'] money went first to the meter resetting companies' lockbox banks and from there to the companies' trustee banks. The funds remained with the trustee banks until the customer actually used the postage it had purchased for the postage meter. At that point, the funds went from the appropriate trustee bank to the Postal Service. During the interval between receipt of the advance payment from the customer and the transmittal of those funds to the Postal Service, the funds in the meter resetting companies' trustee accounts earned interest, which the meter resetting companies kept. It was hardly small change; the interest amounted to millions of dollars a year.
R & R, 2011 WL 1044480, at *1.
This process changed in 1995 when USPS promulgated new regulations governing the meter resetting system. R & R, 2011 WL 1044480, at *1. The 1995 regulations required that customers Id. Compare 39 C.F.R. § 501.15(d) (), with 44 Fed.Reg. 21,015, at 21,017 (Apr. 9, 1979) ().
Two years after the new regulations went into effect, on December 19, 1997, Pitney Bowes sued USPS, alleging that USPS, “through the promulgation of [the 1995] regulations, breached an agreement with Pitney Bowes regarding interest income from funds deposited by postage meter companies.” Pitney Bowes, Inc. v. USPS, 27 F.Supp.2d 15, 17 (D.D.C.1998). Among other things, Pitney Bowes claimed that USPS “unjustly enriched itself at the expense of Pitney Bowes and its CMRS customers”; that USPS “through the promulgation of the CMRS regulations, breached the 1978 [SOU] and related agreements, upon which Pitney Bowes justifiably relied”; that USPS “wrongfully appropriated monies, payable to Pitney Bowes pursuant to contractual arrangements between Pitney Bowes and its CMRS customers”; and that USPS' “actions in promulgating the [1995] CMRS regulations and breaching the contractual arrangement constituted an unconstitutional taking under the Fifth Amendment.” Id. at 19.
That case was assigned to Judge Urbina. In 1998, Judge Urbina issued an opinion in which he denied cross-motions for summary judgment, concluding, among other things, that there were genuine issues of material fact. Pitney Bowes, Inc. v. USPS, 27 F.Supp.2d at 25. Regarding Pitney Bowes' contract claim and its Fifth Amendment takings claim, Judge Urbina concluded: Id. Shortly thereafter, in 1999, that case settled. See R & R, 2011 WL 1044480, at *2.
In 2000, Ascom and Neopost filed similar suits against USPS arising out of USPS' promulgation of the 1995 regulations. See generally Ascom Compl.; Neopost Compl. The complaints of Ascom and Neopost are substantively identical, making the same eight claims against USPS:
(1) USPS' actions constitute a taking of plaintiffs' private property for public use without just compensation in violation of the Fifth Amendment to the United States Constitution. Ascom Compl. ¶¶ 52–56; Neopost Compl. ¶¶ 49–53.
(2) USPS unjustly enriched itself at plaintiffs' expense. Ascom Compl. ¶¶ 57–59; Neopost Compl. ¶¶ 54–56.
(3) USPS breached the terms of its express, implied, or quasi-contractual arrangements with plaintiffs. Ascom Compl. ¶¶ 60–64; Neopost Compl. ¶¶ 57–60.
(4) Plaintiffs were third-party beneficiaries of the 1978 SOU between Pitney Bowes and USPS. Ascom Compl. ¶¶ 65–69; Neopost Compl. ¶¶ 61–65.
(5) By compensating Pitney Bowes but not plaintiffs, USPS breached its constitutional obligation to treat similarly situated parties equally. Ascom Compl. ¶¶ 70–72; Neopost Compl. ¶¶ 66–69.
(6) Plaintiffs relied to their detriment on USPS' promise that they would be permitted to keep interest, and they are now entitled to it. Ascom Compl. ¶¶ 73–76; Neopost Compl. ¶¶ 70–72.
(7) USPS violated a duty to treat regulated parties equally in compensating Pitney Bowes but not plaintiffs. Ascom Compl. ¶¶ 77–79; Neopost Compl. ¶¶ 73–75.
(8) Plaintiffs are entitled to recovery in quantum meruit. Ascom Compl. ¶¶ 80–82; Neopost Compl. ¶¶ 76–79.
Shortly after plaintiffs' filed their complaints, USPS moved to dismiss all eight claims on the ground that each failed to state a claim upon which relief could be granted; USPS also asserted that this Court lacked jurisdiction over this case. See Ascom Hasler Mailing Sys., Inc. v. USPS, 2007 WL 724896, at *2. On March 6, 2007, Magistrate Judge Facciola issued a memorandum opinion recommending that USPS' motion to dismiss be denied except as to plaintiffs' fourth claim, the third-party beneficiary claim, on which he recommended that USPS' motion be granted. Id. at *7. Both sides filed objections to that memorandum opinion.
On September 27, 2007, the Court issued a Memorandum Opinion and Order resolving the parties' objections. See generally Memorandum Opinion and Order, Sept. 27, 2007 [Dkt. No. 95]. First, regarding USPS' jurisdictional arguments, the Court held: “Congress has waived sovereign immunity via the ‘sue and be sued’ clause of the Postal Reorganization Act...
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