Federal Exp. Corp. v. U.S. Postal Service

• Decision Date: 31 July 1998
• Docket Number: No. 97-5793,97-5793
• Citation: 151 F.3d 536
• Parties: 1998-2 Trade Cases P 72,224, 47 U.S.P.Q.2d 1641 FEDERAL EXPRESS CORPORATION, Plaintiff-Appellee, v. UNITED STATES POSTAL SERVICE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 536

151 F.3d 536

1998-2 Trade Cases P 72,224, 47 U.S.P.Q.2d 1641

FEDERAL EXPRESS CORPORATION, Plaintiff-Appellee, v. UNITED STATES POSTAL SERVICE, Defendant-Appellant.

No. 97-5793.

United States Court of Appeals Sixth Circuit.

Argued June 12, 1998.

Decided July 31, 1998.

Dwayne S. Byrd (briefed), R. Larry Brown (argued and briefed), Federal Express Corporation, Memphis TN, for Federal Express Corp.

John C. Hoyle (briefed), Barbara C. Biddle (briefed), Jeffrey Clair (argued), U.S. Dept. of Justice, Civil Division, Appellate Staff, Washington, DC, for U.S. Postal Service.

L. Peter Farkas (briefed), Farkas & Manelli, Washington, DC, for Air Courier Conference of America.

Kaethe B. Schumacher (briefed), Schnader, Harrison, Segal & Lewis, Philadelphia, PA, John E. McKeever (briefed), Piper & Marbury, Philadelphia, PA, for United Parcel Service.

Before: KRUPANSKY, SILER, and COLE, Circuit Judges.

OPINION

KRUPANSKY, Circuit Judge.

The defendant-appellant United States Postal Service ("the Postal Service" or "USPS"), on interlocutory appeal certified under 28 U.S.C. § 1292(b), has attacked the district court's rejection of its motion to dismiss for lack of subject matter jurisdiction, the complaint of plaintiff-appellee Federal Express Corporation ("FedEx"), which alleged that the Postal Service had disseminated false and deceptive commercial advertisements, to the damage of FedEx, in transgression of the Lanham Act, 15 U.S.C. § 1051 et seq.. USPS has supported its motion with two alternate jurisdictional theories, each of which presents a pure question of law. First, USPS has proposed that, as an instrument of the national sovereign, it is immunized against federal tort causes including Lanham Act lawsuits by operation of the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b) & 2671-80. Second, the Postal Service has argued that it is not subject to the strictures of the Lanham Act because it allegedly is not a "person" within that Act's definition. On review, the appellant has contested the trial forum's adverse edict that the Postal Service may be directly sued for alleged Lanham Act infractions because Congress statutorily waived the Postal Service's traditional sovereign immunization against lawsuits including federal tort actions, and thus, as a federal instrumentality capable of being sued, USPS is a Lanham Act "person." See Federal Express Corp. v. United States Postal Service, 959 F.Supp. 832 (W.D.Tenn.1997).

In 1970, Congress dissolved the cabinet-level United States Post Office Department, legislatively substituting, via the Postal Reorganization Act, 39 U.S.C. § 101 et seq. ("the PRA"), the newly-created United States Postal Service. By statute, the Postal Service retained certain attributes of a government agency. See, e.g., 39 U.S.C. § 201 (stating that USPS is "an independent establishment of the executive branch of the Government of the United States"). However, Congress concurrently invested this hybrid entity with the "status of a private commercial enterprise." Loeffler v. Frank, 486 U.S. 549, 556, 108 S.Ct. 1965, 100 L.Ed.2d 549 (1988) (citation omitted). The Supreme Court has invoked the economically self-sustaining design of the USPS (see 39 U.S.C. § 3621), as well as the legislative history of the PRA, as mirroring a congressional intent that the Postal Service should "be run more like a business than had its predecessor, the Post Office Department." Franchise Tax Board of California v. United States Postal Service, 467 U.S. 512, 519-20 & n. 13, 104 S.Ct. 2549, 81 L.Ed.2d 446 (1984); Loeffler, 486 U.S. at 556-57, 108 S.Ct. 1965.

Although the Postal Service, with exceptions, generally possesses a legal monopoly over the commercial carriage of ordinary "letters," see 18 U.S.C. §§ 1693-99, 39 U.S.C. §§ 601-06, 39 C.F.R. § 310.2, a postal regulation authorized by 39 U.S.C. § 601(b) has, since 1979, permitted private couriers such as FedEx, ¹ subject to specified conditions, to carry "extremely urgent letters" for hire. 39 C.F.R. § 320.6. In execution of its congressionally-ordained competitive entrepreneurial mission, USPS has, since approximately 1995, pursued an aggressive commercial advertisement campaign targeted against its private sector rivals in the expedited letter delivery market, including FedEx, in a bid to increase its share of that traffic. FedEx has alleged in its instant complaint that certain of USPS's public representations touting its "Priority Mail" and "Global Priority Mail" delivery services, and its negative comparative characterization of FedEx's competing "FedEx 2 Day" air courier service, constituted false advertisement and unfair competition violative of the Lanham Act. ²

FedEx has charged that the Postal Service has inaccurately and misleadingly boasted that its priority mail services, though offered at lower cost, are nonetheless comparable or superior in quality to the priority document delivery services offered by FedEx. FedEx has averred that, to the contrary, its express letter delivery system includes superior services and guarantees which are absent from USPS's priority mail offerings. For instance, the plaintiff has alleged that its "FedEx 2 Day" rush delivery service includes tracking of packages throughout the shipment process, coupled with a money-back guarantee of arrival at the final destination within two days; whereas the Postal Service's "Priority Mail" and "Global Priority Mail" services promise delivery within two or three days of dispatch but do not guarantee arrival within any number of days, have never afforded cash refunds to dissatisfied customers, and do not include package tracking. Via its Lanham Act complaint, the plaintiff has sought an injunction forbidding future misleading advertisements by USPS, monetary damages, and other relief.

The Lanham Act stipulates, in pertinent portion:

(1) Any person who, on or in connection with any goods or services ... uses in commerce any ... false or misleading description of fact, or false or misleading representation of fact, which ...

(B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a).

The federal courts may exercise subject matter jurisdiction over a cause prosecuted against a federal agency only if the United States has consented to be sued by waiving sovereign immunity. United States v. Mitchell, 463 U.S. 206, 212, 103 S.Ct. 2961, 77 L.Ed.2d 580 (1983). A district court's disposition of a defendant's motion to dismiss a complaint for lack of subject matter jurisdiction poses a conclusion of law reviewed de novo. Madison-Hughes v. Shalala, 80 F.3d 1121, 1123 (6th Cir.1996).

Consonant with the Postal Service's commercial mission, Congress mandated in the PRA that the "general powers" of USPS include the authority "to sue and be sued in its official name." 39 U.S.C. § 401(1). See Loeffler, 486 U.S. at 555-56, 108 S.Ct. 1965. The Supreme Court has construed that proviso to effect a general forfeiture of governmental immunity against private litigations which target the Postal Service, because Congress's inclusion of a "sue or be sued" clause in an agency's authorizing legislation creates a presumption of abandonment of public immunity. ³ Franchise Tax Board, 467 U.S. at 516-20, 104 S.Ct. 2549 (citing, inter alia, Federal Housing Administration v. Burr, 309 U.S. 242, 60 S.Ct. 488, 84 L.Ed. 724 (1940)). Thus, absent contrary statutory dictates or other compelling proof that Congress did not intend to renounce USPS's insulation from private lawsuits of the type at issue herein despite its general disavowal of postal immunity, the instant action must proceed against the Postal Service as it would against "any other business." Franchise Tax Board, 467 U.S. at 520, 104 S.Ct. 2549.

The Postal Service has theorized that Congress, via incorporation of the Federal Tort Claims Act, 28 U.S.C §§ 1346(b) & 2671-80 ("the FTCA"), ⁴ into the PRA, 39 U.S.C. § 409(c), dictated postal immunization against Lanham Act litigation irrespective of the PRA's broad general "sue and be sued" proviso. USPS has argued that Congress intended to limit the PRA's otherwise universal renunciation of sovereign protection against lawsuits by directing in the PRA that tort lawsuits implicating the Postal Service, like those involving the actions of any other federal governmental entity, must satisfy the requirements of the FTCA. See 39 U.S.C. § 409(c) ("The provisions of chapter 171 and all other provisions of title 28 relating to tort claims shall apply to tort claims arising out of the activities of the Postal Service.") Furthermore, the FTCA, by its explicit terms, provides the sole avenue by which lawsuits within its ambit may be advocated against the United States as defendant for the actions of any office of the federal government, irrespective of whether that bureau's charter legislation included or did not include a "sue or be sued" provision. See 28 U.S.C. § 2679(a) ("The authority of any federal agency to sue and be sued in its own name shall not be construed to authorize suits against such federal agency on claims which are cognizable under section 1346(b) of this title, and the remedies provided by this title in such cases shall be exclusive.").

Thus, tort causes subordinate to the FTCA must conform to the rules, standards, and procedures of that Act; such actions may not be asserted against even a statutorily suable federal agency (such as USPS) in the manner that an identical claim would be pursued against a private juristic creature. Loeffler, 486 U.S. at 562, 108 S.Ct. 1965 ("Although Congress enacted the FTCA to allow suits against many agencies that previously had been immune from suits in tort, it also wished to ...