Friedlander v. US Postal Service

• Decision Date: 23 March 1987
• Docket Number: Civ. A. No. 86-1990.
• Citation: 658 F. Supp. 95
• Parties: Mitchell K. FRIEDLANDER, et al., Plaintiffs, v. UNITED STATES POSTAL SERVICE, Defendant.
• Court: U.S. District Court — District of Columbia

658 F. Supp. 95

Mitchell K. FRIEDLANDER, et al., Plaintiffs, v. UNITED STATES POSTAL SERVICE, Defendant.

Civ. A. No. 86-1990.

United States District Court, District of Columbia.

March 23, 1987.

Dale B. Hinson and Robert G. Seasonwein, Washington, D.C., for plaintiffs.

Thomas Millet and Robert C. Chestnut, Dept. of Justice, Washington, D.C., for defendant.

MEMORANDUM

GASCH, District Judge.

I. INTRODUCTION

Defendant's motion to dismiss is in response to a complaint alleging that two cease and desist orders entered by the United States Postal Service ("USPS") violated the principle of separation of powers, the first amendment and the exclusive jurisdiction of the Federal Trade Commission ("FTC") and the Food and Drug Administration ("FDA"). Claiming that no adequate remedy at law exists, plaintiffs' complaint requests declaratory judgment and injunctive relief. The primary issue before the Court is whether the USPS is a business enterprise wholly independent of the executive branch of government and thereby unconstitutionally functions as an enforcement and adjudicatory body.

II. BACKGROUND

A. Factual Setting

Plaintiffs in this action consist of Mitchell K. Friedlander, a resident of Fort Lauderdale, Florida, and four corporations organized under Florida law and controlled by Friedlander.¹ Between July and November of 1984, the Consumer Protection Division of the USPS filed numerous complaints against plaintiffs charging mail fraud. These complaints alleged that plaintiffs had solicited consumers through the mail with false representations about weight loss and breast enlargement products.²

After extensive hearings, with testimony heard from numerous medical experts, the Postal Service determined in September, 1985, that plaintiffs had used false representations to defraud consumers about the three weight loss products and three breast enlargement products. See Defendant's Attachments 1-3. A brief discussion of some of these advertisements and their featured products is warranted.

Two of the weight loss tablets promoted by plaintiffs, Intercal-sx and Metabolite-2050, consist solely of cyanopsis tetragonolobus, the Latin name for guar. When guar is mixed with water, it swells and becomes gelatinous; it is often used to thicken ice cream, salad dressings, skin creams and lotions. See Defendant's Attachment 1 at 32 (Postal Service Decision dated Sept. 10, 1985). In sensational terms, plaintiffs advertised that these guar tablets caused significant weight loss in virtually all users, that dieting and exercise were unnecessary, that ingestion of the tablets prevented foods from converting to stored fat and that the weight loss claims were supported by scientifically sound clinical studies. Id. at 4. The Acting Judicial Officer for the USPS conducted hearings and found that all of these promotional representations were false and that plaintiffs were implementing a scheme for obtaining money through mail fraud within the meaning of 39 U.S.C. § 3005 (1978 & 1986 Supp.). The lengthy Postal Decision of September 10, 1985, noted the existence of unconfirmed reports suggesting that guar caused satiety in some obese individuals but that, otherwise, the substance far from fulfilled the "exaggerated claims" of plaintiffs.³

Similarly, after another round of hearings, the Postal Service concluded that plaintiffs' breast enlargement products were fraudulently advertised to the public through the mails. These products were topically applied lotions. In the Postal Decision dated September 30, 1985, the Judicial Officer found that, contrary to plaintiffs' advertisements, no topical cream will cause a woman's breasts to become larger. Any change in breast size is due solely to complex hormonal activity, such as that during menstruation and pregnancy, or is the result of surgical implantation. The active ingredient in these lotions was niacin which, when applied topically, causes a blush by stimulating blood flow to surface capillaries. See Defendant's Attachment 3. For both the weight loss pills and breast enlargement lotions, the USPS issued cease and desist orders preventing plaintiffs from making further false representations unless substantiated by reliable and competent scientific evidence.⁴

Plaintiffs did not appeal these cease and desist orders. On July 18, 1986, however, plaintiffs filed the instant action charging that the entry of the cease and desist orders by the Postal Service violated separation of powers principles, the first amendment and the exclusive jurisdiction of the FTC and the FDA. See Complaint at ¶¶ 22, 33 and 35. As plaintiffs claim to have no adequate remedy at law, their complaint requests declaratory judgment that 39 U.S.C. § 3005 is unconstitutional. The complaint further demands that the Postal Service be enjoined from enforcing the cease and desist orders against plaintiffs or from restraining plaintiffs' ability to advertise and sell food, drugs, cosmetics or devices through the United States mail. See Complaint at 13-14.

B. Constitutional and Statutory Scheme

The Constitution expressly grants Congress the power to enact all laws it deems necessary and proper to establish post offices and post roads. United States Constitution, Article I, § 8, cl. 7. In 1970, Congress passed a comprehensive postal reform package known as the Postal Reorganization Act ("Act"), 39 U.S.C. § 101 et seq. The Act abolished the Post Office Department which had administered the Nation's mails since 1789. See Act of 1789, ch. 16, 1 Stat. 70. In its place, the Act created the United States Postal Service as an "independent establishment of the executive branch of the Government of the United States...." 39 U.S.C. § 201 (1978).

Under the Act, the Postal Service is directed by a Board of Governors composed of eleven members. 39 U.S.C. § 202(a). Nine of the members, known as Governors, are appointed by the President, with the advice and consent of the Senate, for staggered nine year terms.⁵ 39 U.S.C. § 202(a) & (b). The President may remove a Governor "for cause." 39 U.S.C. § 202(a). The nine Governors, in turn, appoint and have the power to remove the Postmaster General, the tenth Board member. 39 U.S.C. § 202(c). Finally, the nine Governors and the Postmaster General appoint and have the power to remove the Deputy Postmaster General, the eleventh member.⁶ 39 U.S.C. § 202(d). Under the Act, the Board, as the managing body of the Postal Service, has a wide array of general powers such as the authority to enter into contracts, to acquire property, to spend money and to sue or be sued. See 39 U.S.C. § 401.

By reorganizing the postal system, Congress' expressed purpose was to

Convert the Post Office Department into an independent establishment in the Executive Branch of the Government freed from direct political pressures and endowed with the means of building a truly superior mail service.

H.R.Rep. No. 1104, 91st Cong., 2d Sess. 1 (1970) U.S.Code Cong. & Admin.News 1970, pp. 3649, 3650 ("House Report"). Congress intended to protect the Postal Service from political pressures by mandating that the Postmaster General and the Deputy Postmaster General serve at the pleasure of the presidentially appointed Board members. Id. at 13, U.S.Code Cong. & Admin.News 1970, p. 3661. In sum, Congress explained that the day-to-day management of the Postal Service would be removed from congressional and presidential areas of concern but "broad policy guidance" would not be so removed. Id.

The terms of the Act clearly provide that the Postal Service is empowered "to sue and be sued in its official name." 39 U.S.C. § 401(1). See also Franchise Tax Board of California v. USPS, 467 U.S. 512, 519, 104 S.Ct. 2549, 2553, 81 L.Ed.2d 446 (1984) (under Reorganization Act, Congress waived sovereign immunity of Postal Service). The Act, however, further provides that the Department of Justice ("DOJ") exclusively controls the legal representation of the Postal Service:

The Department of Justice shall furnish, under section 411 of this title 39 U.S.C. § 411, the Postal Service such legal representation as it may require, but with prior consent of the Attorney General the Postal Service may employ attorneys by contract or otherwise to conduct litigation brought by or against the Postal Service or its officers or employees in matter affecting the Postal Service.

39 U.S.C. § 409(d); see also House Report at 26. The Court notes that the Postal Service may contract for attorneys outside of the DOJ only with the prior consent of the Attorney General.⁷

Additionally, the Postal Service may institute administrative proceedings to investigate whether "any person is engaged in conducting a scheme or device for obtaining money or property through the mail by means of false representations...." 39 U.S.C. § 3005(a); see also 39 C.F.R. § 952 (1986) (procedures for § 3005 hearings). Should the USPS establish a section 3005 violation, it is empowered by statute to issue a "cease and desist" order preventing use of the mails in furtherance of a fraudulent scheme.⁸ 39 U.S.C. § 3005(a)(3) (1986 Supp.). Moreover, the Postal Service, through the DOJ, may seek a temporary restraining order in federal district court to detain the incoming mail of a person suspected of violating section 3005 until the conclusion of any administrative proceedings and appeal therefrom. 39 U.S.C. § 3007(a).

The USPS cease and desist orders are not self-enforcing. Under section 3012 of the Act, any person evading the effect of a section 3005 order may be subject to civil penalties in the amount of $10,000 for each day the postal system is used to further a fraudulent scheme. 39 U.S.C. § 3012(a)(1) (1986 Supp.). The DOJ may commence a civil action on behalf of the Postal Service to enforce these penalties. 39 U.S.C. § 3012(b)(1). Alternatively, an individual may avoid the risk of a section 3012 suit by filing in federal district court an immediate appeal from the entry of a ...