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

• Decision Date: 21 March 1997
• Docket Number: No. 96-3151-D/A.,96-3151-D/A.
• Citation: 959 F.Supp. 832
• Parties: FEDERAL EXPRESS CORPORATION, Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.
• Court: U.S. District Court — Western District of Tennessee

Page 832

959 F.Supp. 832

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

No. 96-3151-D/A.

United States District Court, W.D. Tennessee, Western Division.

March 21, 1997.

Dwayne S. Byrd, R. Larry Brown, Lester A. Bishop, Jr., Federal Exp. Corp. Legal Dept., Memphis, TN, for plaintiff.

Joe A. Dycus, U.S. Attorney's Office, for defendant.

ORDER DENYING DEFENDANT'S MOTION TO DISMISS

DONALD, District Judge.

Defendant, an independent establishment of the federal government, has challenged this court's subject matter jurisdiction over Plaintiff's cause of action brought pursuant to the Lanham Act, 15 U.S.C. §§ 1051-1127 (1994). Jurisdiction is premised on 15 U.S.C. § 1121(a) and 39 U.S.C. § 401(1), a provisions of the Postal Reorganization Act ("PRA").

I. BACKGROUND

Under the PRA, the United States Postal Service ("USPS") enjoys a hybrid status. It is both an "independent establishment of the executive branch," 39 U.S.C. § 201, retaining certain attributes of a federal agency, and a quasi-private enterprise that was "`launched ... into the commercial world'" by the 1971 law that created it. Franchise Tax Bd. of Cal. v. United States, 467 U.S. 512, 520, 104 S.Ct. 2549, 2554, 81 L.Ed.2d 446 (1984) (quoting FHA v. Burr, 309 U.S. 242, 245, 60 S.Ct. 488, 490, 84 L.Ed. 724 (1940)). In accordance with its desire that USPS be operated more like a business than its predecessor, Congress authorized the Postal Service to "sue and be sued in its official name." 39 U.S.C. § 401(1). This language operates to waive the government's traditional sovereign immunity to suit. Loeffler v. Frank, 486 U.S. 549, 556, 108 S.Ct. 1965, 1969-70, 100 L.Ed.2d 549 (1988). This waiver "must be liberally construed and ... the Postal Service's liability must be presumed to be the same as that of any other business." Id.

The PRA also incorporated the provisions of the Federal Torts Claim Act ("FTCA"), a separate waiver of immunity for certain torts committed by federal employees. 28 U.S.C. § 1346(b) & §§ 2671-80. Specifically, the PRA states that "[t]he provisions of chapter 171 and all other provisions of title 28 relating to tort claims shall apply to tort claims arising out of activities of the Postal Service." 39 U.S.C. § 409(c). This section refers to the FTCA, which prescribes the exclusive means by which a plaintiff may allege a tort claim against the federal government. Although generally the FTCA operates to waive immunity, Defendant argues that in the Postal Service's case, § 409(c) restricts the otherwise broad waiver of sovereign immunity embodied in the sue-and-be-sued clause and bars Plaintiff's Lanham Act claim. "Although the Post Office may generally sue and be sued, its capacity to be sued in tort is limited by the requirements of the FTCA." Willis v. United States, No. 91-4111, 1992 WL 180181, at *2 (6th Cir. July 29, 1992).

II. FEDERAL TORT CLAIMS ACT

The United States cannot be sued without its consent, and consent is a prerequisite for jurisdiction. United States v. Mitchell, 463 U.S. 206, 212, 103 S.Ct. 2961, 2965, 77 L.Ed.2d 580 (1983). Defendant's argument that this court lacks jurisdiction over Plaintiff's Lanham Act claim proceeds along the following path of logic:

1. tort claims against a federal governmental entity like USPS must be brought under the Federal Tort Claims Act;

2. the FTCA's remedial scheme encompasses any action that "sounds in tort";

3. the Lanham Act is derived from the common law tort of unfair competition, therefore it "sounds in tort";

4. the FTCA provides for a cause of action against the federal government—that is, it waives sovereign immunity—only in accordance with the "law of the place" where the tortious act or omission occurred;

5. the "law of the place" has been construed to refer exclusively to state law;

6. because the Lanham Act is not a state law, the FTCA does not waive immunity for Lanham Act claims brought against USPS.

(Def.'s Mem. Supp. Mot. to Dismiss at 4-6.)

In response, Plaintiff argues that Lanham Act claims are not "cognizable" under the FTCA because that statute applies only to state law tort claims, not federal laws or constitutional torts, and that pursuant to the broad waiver of immunity under the PRA's "sue-and-be-sued" clause, this court has jurisdiction to consider the Lanham Act suit.

A. FDIC v. Meyer

Defendant claims that "[a]ll federal courts which have addressed claims sounding in tort raised against the Postal Service have concluded that [§ 409] explicitly limits the ability of plaintiffs to sue the Postal Service on such claims." (Id. at 3.) Most of the rulings the Postal Service cites on this point, however, were decided prior to the Supreme Court's ruling in FDIC v. Meyer, 510 U.S. 471, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994), in which the Court unanimously held that not all claims "sounding in tort" were cognizable under 28 U.S.C. § 1346(b). Id. at 479-80, 114 S.Ct. at 1002-03.

In Meyer, a former savings and loan official fired by the Federal Savings and Loan Insurance Corporation ("FSLIC") brought a Bivens action against the federal agency, claiming that it terminated him in violation of his due process rights. The opinion, written by Justice Thomas, rejected the claim by FSLIC's statutory successor, the Federal Deposit Insurance Corporation ("FDIC"), that the FTCA barred the lawsuit based on the theory that a constitutional tort was at once cognizable under § 1346(b) and precluded by it because it did not arise out of state law. The Court noted that, while the FTCA is the exclusive remedy for claims judged "cognizable" under the statute, merely labeling a cause of action as "tort" does not bring it automatically within the statute:

[Section] 1346(b) describes the scope of jurisdiction by reference to claims for which the United States has waived its immunity and rendered itself liable. FDIC seeks to uncouple the scope of jurisdiction under § 1346(b) from the scope of the waiver of sovereign immunity under § 1346(b). Under its interpretation, the jurisdictional grant would be broad (covering all claims sounding in tort), but the waiver of sovereign immunity would be narrow (covering only those claims for which a private person would be held liable under state law). There simply is no basis in the statutory language for the parsing FDIC suggests.

Id. at 479, 114 S.Ct. at 1002 (emphasis added).

Defendant responds that Meyer has no bearing on FedEx's lawsuit because, although the FSLIC's organic statute contained a "sue and be sued" clause nearly identical to the one in the PRA, the law creating the FSLIC did not incorporate the FTCA. This difference takes the analysis out of Meyer's orbit, according to Defendant. As explained in USPS' reply brief, § 409(c) of the PRA "makes the FTCA and its attendant limitations on suit applicable to all torts against the Postal Service, regardless of whether the torts are premised on common law or federal statutory law." (Def.'s Reply Br. at 4.) Indeed, Defendant's gloss on Meyer is that a federal entity "subject to a `sue and be sued' clause that is not limited by a provision similar to 409(c) may otherwise be subject to suit for certain torts that are not cognizable under the FTCA." (Def.'s Mem. at 5) (emphasis added). Defendant's leap of logic is untenable; nothing in Meyer supports such an expansive reading of the FTCA. Indeed, the plain meaning of § 409 and the legislative history surrounding the passage of the PRA supports the contrary conclusion.

B. Statutory Construction

In responding to Plaintiff's argument that § 409(c) is redundant because the FTCA, by its own language, already applies to all federal agencies, (see Pl.'s Mem. Opp'n Mot. to Dismiss at 5 n. 1), Defendant argues that a statute must be construed to give effect to all its provisions. The court agrees with this doctrine of statutory construction but does not believe it compels the conclusion that Congress created a "super FTCA" when it passed the Postal Reorganization Act.

To begin with, this principle does not override the plain language of § 409, which states: "The provisions of [FTCA] relating to tort claims shall apply to tort claims arising out of activities of the Postal Service." The statute does not say the FTCA shall govern "all causes of action that are based on common law torts" or "tort claims, including those based on federal statutes"—merely "tort claims." See Blue Chip Stamps v. Manor Drug Stores, 421 U.S. 723, 756, 95 S.Ct. 1917, 1935, 44 L.Ed.2d 539 (1975) (Powell, J., concurring) ("[t]he starting point in every case involving construction of a statute is the language itself"); Aaron v. SEC, 446 U.S. 680, 697, 100 S.Ct. 1945, 1956, 64 L.Ed.2d 611 (1980) (absent a "very clear" legislative intent, the plain meaning will prevail). As the Supreme Court has stated, "courts must presume that a legislature says in a statute what it means and means in a statute what it says there." Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-54, 112 S.Ct. 1146, 1149-50, 117 L.Ed.2d 391 (1992).

Further, § 409(c) undoubtedly has a definite purpose, although not the one the Postal Service assigns to it. In must be remembered that the Postal Reorganization Act worked a seismic change in the relationship between the U.S. government and the federal entity that delivers our daily mail. "Congress intended to establish an independent, self-sufficient Postal Service that differed both de jure and de facto from its predecessor, the United States Post Office." United Va. Bank/Nat'l v. Eaves, 416 F.Supp. 518, 521 (E.D.Va.1976). However, Congress did not strip USPS of all attributes of a federal agency. Young v. United States Postal Serv., 698 F.Supp. 1139, 1141 (S.D.N.Y.1988); see also H.R.Rep. No. 1104 (1970), reprinted in 1970 U.S.C.C.A.N. 3649, 3668 (the Postal Service remains "first, last, and always" a public service). To this end, § 409 affirmed that, despite its new independence, USPS retained its...