Davric Maine Corp. v. U.S. Postal Service, 00-1672

• Decision Date: 08 December 2000
• Docket Number: No. 00-1672,00-1672
• Citation: 238 F.3d 58
• Parties: (1st Cir. 2001) DAVRIC MAINE CORPORATION, AND JOSEPH RICCI, Plaintiffs, Appellants, v. UNITED STATES POSTAL SERVICE, AND JOSEPH LEONTI, Defendants, Appellees. Heard
• Court: U.S. Court of Appeals — First Circuit

Page 58

238 F.3d 58 (1st Cir. 2001)

DAVRIC MAINE CORPORATION, AND JOSEPH RICCI, Plaintiffs, Appellants, v. UNITED STATES POSTAL SERVICE, AND JOSEPH LEONTI, Defendants, Appellees.

No. 00-1672

United States Court of Appeals For the First Circuit

Heard December 8, 2000

Decided January 26, 2001

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MAINE

[Hon. D. Brock Hornby, U.S. Chief District Judge]

[Copyrighted Material Omitted] Edward S. MacColl, with whom Thompson, Bull, Furey, Bass & MacColl, L.L.C., John S. Campbell, and Campbell & McArdle, P.A., were on brief, for appellant.

Hasley B. Frank, Assistant United States Attorney, with whom Jay P. McCloskey, United States Attorney, was on brief, for appellee.

Before Torruella, Chief Judge, Bownes, Senior Circuit Judge, and Lynch, Circuit Judge.

LYNCH, Circuit Judge.

In the course of deciding on a site for a new postal facility, Joseph Leonti, the plant manager of the Portland, Maine, United States Postal Service center, made ill-considered statements about one of the sites that had been under consideration. The owner of the site, the Davric Maine Corporation, felt that it and the site had been defamed. Davric and the man who owns it, Joseph Ricci, filed suit in federal court against both the Postal Service and Leonti for defamation and tortious interference under state law, and in addition claimed that a constitutional tort had been committed.

The district court dismissed the claims against the Postal Service on the ground that the Postal Service enjoys sovereign immunity from suit absent a waiver, and that its immunity had not been waived as to defamation or tortious interference claims. The court also dismissed the state law tort claims against the official on the ground that the official had been acting within the scope of his employment, and dismissed the constitutional tort claim for failure to state a claim. Plaintiffs appeal. This case presents an interesting question of first impression about the relation and interaction between the Postal Reorganization Act, 39 U.S.C. § 101 et seq., and the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-2680. We affirm the district court's dismissal based on the conclusion that these Acts, taken together, do not waive the Postal Service's immunity for state defamation or tortious interference claims. We also affirm the dismissal of the claims against Leonti.

I.

For the purposes of a motion to dismiss, we accept as true the facts alleged in the complaint. See Day v. Massachusetts Air Nat'l Guard, 167 F.3d 678, 680 (1st Cir. 1999); Duckworth v. Pratt & Whitney, Inc., 152 F.3d 1, 3 (1st Cir. 1998). The Postal Service in Maine entered into a search for a new location for its processing and distribution center. One site under consideration was a parcel in Scarborough Downs owned by Davric. The Postal Service entered into initial negotiations to purchase the site, but soon focused on a different site, one on Rand Road, as its preferred site. Joseph Ricci, the indirect owner of Davric, and Tony Armstrong, Davric's real estate broker, became outspoken critics of the Rand Road site, charging that the site was environmentally sensitive and alleging other mischief behind the Postal Service's preference for the Rand Road site. The Postal Service eventually rejected the Rand Road site.

After rejecting that site, the Postal Service again reviewed several possible sites, including the Davric site, and ultimately announced a plan to move the center to Lewiston,¹ rather than settling on the Davric site. Plaintiffs maintain that the Davric site was preferable and that this rejection of the site was in retaliation for their outspoken opposition to the Rand Road site.

It is in the course of defending this decision that the alleged defamation took place. In a series of meetings with Postal Service employees to explain the site selection process, Joseph Leonti, the plant manger of the current distribution center, said that the Davric site was environmentally contaminated and that its development posed serious wetlands problems. In one instance, Leonti allegedly linked Ricci and Davric to organized crime, claiming that there were dead horses and bodies buried on the site, and "maybe even Jimmy Hoffa could be buried there." Plaintiffs say that all of these descriptions are untrue. These meetings also included presentation materials prepared in part by the Postal Service, allegedly defamatory as well.

Plaintiffs then filed this suit,² contending that these false statements have diminished the value of Davric's property and will continue to do so, and that they have also caused substantial damages to Ricci's reputation.

II.

Sovereign immunity presents a threshold issue for Davric's suit for damages against the Postal Service. The Postal Service argues that under § 409(c) of Title 39, codifying the Postal Reorganization Act, all state-law tort claims against the Postal Service must be brought under the Federal Tort Claims Act. However, the Postal Service says, the FTCA explicitly exempts most intentional torts, including defamation and tortious interference, from its waiver of sovereign immunity. See 28 U.S.C. § 2680(h). Therefore, the Postal Service concludes, the defamation and interference claims must be dismissed. Davric responds that the Postal Reorganization Act's general "sue and be sued" provision, see 39 U.S.C. § 401(1), governs all suits against the Postal Service not cognizable under the FTCA, and since defamation suits are not cognizable under the FTCA, they fall under the PRA's general waiver of sovereign immunity.

These contending constructions of the statutory scheme present a close question. The text of the individual sections does not present a clear answer, but the structure of the scheme argues against Davric's position. The legislative history of these provisions affords little guidance. Absent evidence of Congressional intent to have the Postal Service, a quasi-public entity, held liable for intentional torts under state law, the exclusion from the FTCA's waiver of sovereign immunity controls.

Enacted in 1970, the PRA established the Postal Service as a quasi-public entity that was to compete on essentially level ground with private enterprise. To that end, § 401(1) provides that the Postal Service can "sue and be sued," generally waiving the immunity from suit it would otherwise have as a public entity.³ See 39 U.S.C. § 401(1). See also Loeffler v. Frank, 486 U.S. 549, 556 (1988) ("By launching 'the Postal Service into the commercial world' and including a sue-and-be-sued clause in its charter, Congress has cast off the Service's 'cloak of sovereignty' and given it the 'status of a private commercial enterprise.'") (citing Library of Congress v. Shaw, 478 U.S. 310, 317 n.5 (1986)). However, § 409 of the PRA provides that tort suits brought against the Postal Service are governed by the provisions of the FTCA.⁴ See 39 U.S.C. § 409(c); see also 28 U.S.C. § 2679(a) (providing that claims against "sue and be sued" agencies must be brought through the FTCA where "cognizable" under the FTCA).⁵ Finally, § 2680 lists exceptions to the FTCA's waiver of sovereign immunity, including the exemption of most state intentional torts.⁶ See 28 U.S.C. § 2680(h).

The issue turns on how these provisions are characterized, that is, whether state intentional torts such as defamation fall within the scope of the FTCA but are excepted from its waiver of sovereign immunity and so suit cannot be brought under the PRA, or whether they simply fall outside of its scope as a result of their exception and so suit under the PRA is permissible. While murky on this point, the structure of the statutory scheme, taken altogether, suggests the former interpretation.

By its terms, § 409(c) of the PRA limits the scope of the more general waiver of sovereign immunity contained in § 401(1). For state tort claims arising out of the activity of the Postal Service, § 409(c) compels the application of the FTCA and its attendant provisions. Read in context, then, § 409(c) of the PRA is best understood to waive the immunity from suit that the Postal Service would otherwise enjoy as a federal entity only insofar as that immunity would have been waived under the FTCA. Such a reading accords with the language in 28 U.S.C. § 2679(a) providing that for claims that fall within the purview of the FTCA, claims against sue-and-be-sued agencies are to be treated like a claim against any other federal agency. Two distinct avenues for interpreting § 409(c) both arrive at this conclusion.

First, the reference in PRA § 409(c) to "chapter 171 and all other provisions of title 28 relating to tort claims" can be read to incorporate the FTCA in its entirety as the exclusive vehicle for bringing state tort claims against the Postal Service, including the FTCA's waiver of immunity from suit in § 1346(b), its attendant procedural requirements, the exclusiveness of its remedy compelled by § 2679(a), and its exceptions, as provided in § 2680. On this approach, the question becomes simply whether the claim presented is a state tort claim "arising out of the activities of the Postal Service" under § 409(c). If so, then the claim is governed by the FTCA as a whole, including its exception of defamation and interference claims from its waiver of sovereign immunity.

Davric argues that once the claim falls outside the scope of the FTCA's waiver of sovereign immunity, it then must fall back within the ambit of the PRA's more general waiver. The best basis in the statutory language for this claim is the introduction to the exceptions provision, which states that the provisions of the FTCA "shall not apply" to defamation suits. See 28 U.S.C. § 2680. If the FTCA shall not apply to defamation claims, Davric says, then defamation claims are not cognizable under the FTCA and hence the general waiver of immunity in the PRA applies. However, attention to...