Association of Am. Pub., Inc. v. Governors of US Post. Serv., 72-1641

• Decision Date: 26 June 1973
• Docket Number: No. 72-1641,72-1726.,72-1641
• Citation: 485 F.2d 768
• Parties: ASSOCIATION OF AMERICAN PUBLISHERS, INC., et al. v. The GOVERNORS OF the UNITED STATES POSTAL SERVICE et al., Respondents, Direct Mail Advertising Association, Inc., et al., Intervenors. ASSOCIATED THIRD CLASS MAIL USERS, Petitioner, v. The GOVERNORS OF the UNITED STATES POSTAL SERVICE, Respondent, J. C. Penney Company, Inc., and United Parcel Service, Intervenors.
• Court: U.S. Court of Appeals — District of Columbia Circuit

485 F.2d 768 (1973)

ASSOCIATION OF AMERICAN PUBLISHERS, INC., et al. v. The GOVERNORS OF the UNITED STATES POSTAL SERVICE et al., Respondents, Direct Mail Advertising Association, Inc., et al., Intervenors.

ASSOCIATED THIRD CLASS MAIL USERS, Petitioner, v. The GOVERNORS OF the UNITED STATES POSTAL SERVICE, Respondent, J. C. Penney Company, Inc., and United Parcel Service, Intervenors.

Nos. 72-1641, 72-1726.

United States Court of Appeals, District of Columbia Circuit.

Argued November 6, 1972.

Decided June 26, 1973.

COPYRIGHT MATERIAL OMITTED

Ian D. Volner, Washington, D. C., with whom Richard M. Schmidt, Jr., Washington, D. C., was on the brief, for petitioners in No. 72-1641. Paul Dobin, Washington, D. C., also entered an appearance for petitioners in No. 72-1641.

J. Edward Day, with whom Lee A. Monroe, Washington, D. C., was on the brief, for petitioner in No. 72-1726.

Stephen F. Eilperin, Atty., Dept. of Justice, for respondent. Alan S. Rosenthal, Atty. Dept. of Justice, Louis A. Cox, Marvin H. Morse and Israel Convisser, Attys. U. S. Postal Service, also entered appearances for respondents.

David E. McGiffert, Washington, D. C., was on the brief for intervenor, Direct Mail Advertising Assn. in No. 71-1641.

Robert L. Kendall, Jr. and Frederick C. Belen, were on the brief for intervenor, United Parcel Service, in No. 71-1641 and 71-1726.

David C. Todd, Washington, D. C., was on the brief for intervenor Parcel Post Assn., in No. 72-1641.

Joel P. Stern was on the brief for intervenor J. C. Penney Co., Inc., in Nos. 72-1641 and 72-1726.

Joseph H. Sharlitt and Neal E. Krucoff, Washington, D. C., entered appearances for intervenor, Mail Advertising Corp. of America, in No. 72-1641.

Before BAZELON, Chief Judge, TAMM, Circuit Judge, and WYZANSKI,^* Senior United States District Judge for the District of Massachusetts.

WYZANSKI, Senior District Judge:

In these two actions, brought on the basis of the original jurisdiction conferred on this court by Postal Reorganization Act of 1970, 39 U.S.C. § 3628, Association of American Publishers, Inc., American Library Association, and National Association of College Stores, Inc., (all being petitioners in the first action, No. 72-1641) and Associated Third Class Mail Users, (petitioner in the second action, No. 72-1726) seek review of different orders of the United States Postal Service.

In both cases petitioners named as respondents the Governors of the Postal Service. In 72-1641 the United States Postal Service, an independent establishment of the Executive Branch, created by Act of August 12, 1970, 84 Stat. 720, 39 U.S.C. § 201 et seq., is also named as a respondent.

Clearly the Postal Service was an appropriate respondent inasmuch as Congress provided that it could be "sued in its official name." 39 U.S.C. § 401(1), as is commonly true of such administrative agencies as the Federal Reserve Board, ICC, FTC, NLRB, and SEC. Indeed it seems that action should have been brought only against it and not the Governors, who are, like Governors of the Federal Reserve Board, or members of the ICC, FTC, NLRB and SEC, not appropriate respondents when a board order is challenged on usual Constitutional, statutory, or similar grounds. The Governors of the Postal Service, unlike the former Postmasters-General, are not heads of a department which has no capacity to sue and be sued as though it were a corporate entity. But inasmuch as in these two cases the Governors have not raised this point, and the petitioners' error in pleading is one of refined technicality without substantive significance, and one which could easily be corrected, we shall treat the petitions as though they had been amended.

In the first of the two cases joined in this opinion, 72-1641, petitioners seek review of the Service's June 28, 1972 order. This court allowed United Parcel Service and J. C. Penney Co., Inc. to intervene. In this first case petitioners contend that the Service's June 28, 1972 order approving the Commission's attribution of costs and denying an increase in parcel post rates is invalid because the Commission's attribution was arbitrary and unsupported by evidence and also because the Commission refused to give independent consideration to the educational and cultural value of materials constituting special fourth class mail.

In the second of the two cases, 72-1726, different petitioners seek review of the Service's June 29, 1972 order eliminating the phasing of the increases in permanent third class mail alleged to be required by Section 3626 of the Postal Reorganization Act, 39 U.S.C. § 3626, and putting in effect increased postal rates recommended by the Postal Rate Commission on June 5, 1972.

The main thrusts of the two cases are different. However, they share a common historical and statutory background.

The Postal Reorganization Act, 39 U. S.C. § 101 et seq., substituted for the long-established Post Office Department the Postal Service, as an "independent establishment of the executive branch of the Government" 39 U.S.C. § 201. 39 U.S.C. § 3601 created the Postal Rate Commission also as an "independent establishment of the executive branch of the Government."

39 U.S.C. § 3622(a) provides that if the Postal Service believes that permanent changes in postal rates are appropriate, it shall request the Commission to submit a recommended decision on rate changes.

Then 39 U.S.C. § 3622(b) requires that upon receiving a request, the Commission shall make a recommended decision, taking into account certain factors, which, for the moment, we need not recite.

Pursuant to 39 U.S.C. § 3625(a), "upon receiving a recommended decision from the Postal Rate Commission, the Governors may approve, allow under protest, reject, or modify that decision in accordance with the provisions of this section."

Finally, 39 U.S.C. § 3628 provides for judicial review of a decision of the Governors. No doubt, what was contemplated, despite the unfortunate choice of words, was that the review is to be of an order of the Postal Service rather than of a "decision of the Governors," to which the draftsman of the statute loosely referred. Decisions in the sense of opinions are not reviewable; orders are. Governors are not, but the Service as an entity which Congress made suable is, properly charged as a respondent accountable for legal errors in or implicated in an order of the Service based upon the Governor's decision. Of course, this does not mean that if personally, or in some official capacity other than as a signatory to an order of the Postal Service, a Governor erroneously, negligently, or willfully injured some person, the Governor might not properly be named in some proceeding a defendant; though we avoid, as unnecessary for decision in this case, the prickly issue as to whether he would be suable as a respondent in this court in a proceeding brought under 39 U.S.C. § 3628.

We now turn from the minor technical point with respect to the appropriate parties to these two cases to consider the merits.

In the first case, 72-1641, petitioners' challenge is to the June 28, 1972 order implementing the Governors' decision to increase the postal rates for special fourth class mail while not requiring any increase in parcel post rates.

This is the history of that order.

February 1, 1971 the United States Postal Service, in accordance with the Postal Reorganization Act of 1970, 39 U.S.C. § 101 et seq., submitted to the Postal Rate Commission a request for a recommended decision authorizing increases in postal rates for all major classes and subclasses of mail, except zone rate fourth class mail.

Upon receiving the request the Commission designated a hearing officer called the Chief Examiner.

The Postal Service, in preparing for a hearing before the Chief Examiner, whose duty included taking into account the factors listed in 39 U.S.C. § 3622(b), planned to present evidence showing actual costs and expenses related to postal service previously rendered. The Service in going over its records discovered that postal employees had made errors in the first half of Fiscal Year 1970 by classifying as parcel post, packages actually carried as special rate fourth class mail. To correct the impact of this error the Postal Service used the results of a two-weeks audit, made in November 1969, to shift $35.1 million of attributable costs projected for Fiscal Year 1972 from parcel post to special rate fourth class mail.

Upon submission of that evidence, the Chief Examiner rejected the use of the two-weeks audit as a correct basis for determining appropriate adjustments to the erroneous Fiscal Year 1970 figures. Instead, in order to adjust the erroneous figures, he used the results of the Service's evidence of its in-office cost system for the Fourth Postal Quarter of 1970. On that basis, he recommended that $20.6 million of attributable costs be shifted from special rate fourth class mail to parcel post. Thereupon, he reached the conclusion that the Postal Rate Commission should recommend a 4.6% increase in parcel post rates.

On review, the Commission itself concluded that there was objection to the methods used by both the Postal Service and the Chief Examiner. It averaged the results of both methods and thus made its own adjustment of attributable costs between parcel post and special rate fourth class mail. It increased the former, and reduced the latter, by $10.2 million. Then it decided that the increase in costs attributable to parcel post did not require any increase in parcel post rates. On June 28, 1972, the Governors of the Postal Service approved, and ordered put into effect, the aforesaid decision by the Commission. This is the first order appealed to this court.

Petitioners in 72-1641 attack the June 28, 1972 order on two grounds: first, that the order unlawfully approves the arbitrary and unsupported use by the Commission of estimated costs directly attributable to special fourth class mail ...