Reese Bros., Inc. v. U.S. Postal Service

• Decision Date: 05 March 2007
• Docket Number: Civil Action No. 06-434 (RMU).
• Citation: 477 F.Supp.2d 31
• Parties: REESE BROTHERS, INC., Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant/Counterclaim Plaintiff, v. Reese Teleservices, Inc., and Resources Group, LLC d/b/a TGR Holdings, Inc., Counterclaim Defendants.
• Court: U.S. District Court — District of Columbia

477 F.Supp.2d 31

REESE BROTHERS, INC., Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant/Counterclaim Plaintiff, v. Reese Teleservices, Inc., and Resources Group, LLC d/b/a TGR Holdings, Inc., Counterclaim Defendants.

Civil Action No. 06-434 (RMU).

United States District Court, District of Columbia.

March 5, 2007.

COPYRIGHT MATERIAL OMITTED

Charles H. Nave, Charles H. Nave, P.C., Roanoke, VA, Geoffrey W. Peters, Vienna, VA, for Plaintiff.

Marian L. Borum, U.S. Attorney's Office, Washington, DC, for Defendant/Counterclaim Plaintiff.

Jeffrey B. Balicki, Feldstein Grinberg Stein & McKee, Pittsburgh, PA, for Counterclaim Defendants.

MEMORANDUM OPINION

DENYING THIRD-PARTY DEFENDANT REESE TELESERVICES, INC.'S MOTION TO DISMISS

URBINA, District Judge.

I. INTRODUCTION

The plaintiff, Reese Brothers, Inc. ("Reese Brothers"), is a for-profit telemarketing company which is no longer in business. Reese Brothers claims that the United States Postal Service ("USPS" or "Postal Service") improperly required it to pay standard postage rates for mailings associated with its solicitations for donations for its non-profit clients. The plaintiff brings various constitutional and statutory claims. Responding to a counterclaim filed by the United States, Reese Teleservices, Inc. ("Reese Teleservices") filed a motion to dismiss, claiming that the court lacked subject-matter and personal jurisdiction and that the United States failed to state a claim. Because the court has subject-matter jurisdiction over the United States' counterclaim under the Federal Debt Collection Procedures Act ("FDCPA"), because third-party defendant Reese Teleservices has sufficient minimum contacts with the United States, and because the USPS has stated a valid claim against it, the court denies Reese Teleservices's motion.

II. BACKGROUND

A. Factual Background

Reese Brothers is a formerly operating for-profit telemarketing company. Compl. ¶ 9. While in operation, the plaintiff contracted with non-profit entities to provide them with telemarketing solicitation and direct mail consulting services. Id. As part of its operation, the plaintiff routinely sent mailings to prospective donors. Id. Following an investigation into the plaintiffs business practices in 1998, the United States Postal Service charged the plaintiff with improperly availing itself of discounted postage rates available only to nonprofit entities and for-profit entities acting as agents of non-profit entities. Id. ¶ 14. Basically, the Postal Service concluded that the contractual arrangement between Reese Brothers and its non-profit clients rendered Reese Brothers ineligible for the discounted postage rates. Id. ¶ 16.

In response to Reese Brothers' alleged under-payments (representing the differences between the non-profit postage rate and the standard postage rate), the Postal Service sought a total of $3,600,068.23. Id. ¶¶ 14, 20. After a lengthy administrative appeals process, including the plaintiffs request for forbearance, the Postal Service agreed to forgive $1,953,790.28 of the plaintiff's debt, reducing the amount the plaintiff owes to $1,646,277.95. Id. ¶ 29 & Ex. I.

B. Procedural Background

Attempting now to avoid any payment to the Postal Service, the plaintiff brings suit alleging 17 independent causes of action. The plaintiffs first ten causes of action allege violations of constitutional rights.¹ Compl. ¶¶ 39-48. The remaining seven counts allege that the USPS exceeded its statutory authority under the legal theories that the USPS' conduct constitutes ultra vires, id. ¶ 49, is contrary to Congress' intent, id. ¶ 50, and is arbitrary and capricious, id. ¶¶ 51-55.

The defendant filed a counterclaim and third-party complaint on June 27, 2006, against Reese Teleservices and TRG Holdings, LLC, seeking to collect the debts incurred by plaintiff Reese Brothers. In its third-party complaint, the USPS claims that Reese Teleservices is liable for the debts of Reese Brothers because Reese Teleservices "acquired Reese in December of 2002, and is successor in interest[.]" Third Party Compl. ¶ 53. The USPS brings its third-party complaint under 39 U.S.C. § 2601(a) and 2605, and under the FDCPA, 28 U.S.C. § 3001 et seq. Third-Party Compl. ¶ 2.

In place of an answer to the third-party complaint, Reese Teleservices filed a motion to dismiss on August 16, 2006. In its motion to dismiss, the Reese Teleservices argues that the court lacks subject-matter jurisdiction and personal jurisdiction and that the third-party complaint fails to state a claim. Third-Party Def.'s Mot. to Dismiss ("Mot."). The court turns now resolve these matters.

III. ANALYSIS

The Court Denies the Third-Party Defendant's Motion to Dismiss

The third-party defendant raises three distinct arguments in support of its motion to dismiss the third-party complaint. First, the third-party defendant argues that the court "lacks subject-matter jurisdiction over third-party defendant Reese Teleservices[.]" Mot. at 3. Next, the third-party defendant claims that the court lacks personal jurisdiction over Reese Teleservices. Id. at 4. Finally, it claims that the third-party complaint fails to state a claim upon which relief can be granted. Id. at 5. For the reasons that follow, each of the arguments is unpersuasive.

Subject-Matter Jurisdiction

1. Legal Standard for Dismissal for Lack of Subject-Matter Jurisdiction

Federal courts are courts of limited jurisdiction and the law presumes that "a cause lies outside this limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938); see also Gen. Motors Corp. v. Envtl. Prot. Agency, 363 F.3d 442, 448 (D.C.Cir.2004) (noting that "[a]s a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction").

Because "subject-matter jurisdiction is an `Art. III as well as a statutory requirement[,] no action of the parties can confer subject-matter jurisdiction upon a federal court.'" Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C.Cir.2003) (quoting Ins. Corp. of Ir., Ltd. v. Compaqnie des Bauxite de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed2d 492 (1982)). On a motion to dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1), the plaintiff bears the burden of establishing that the court has subject-matter jurisdiction. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The court may dismiss a complaint for lack of subject-matter jurisdiction only if "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Empagran S.A. v. F. Hoffman-LaRoche, Ltd., 315 F.3d 338, 343 (D.C.Cir.2003) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)), vacated on other grounds, 542 U.S. 155, 124 S.Ct. 2359, 159 L.Ed.2d 226 (2004).

Because subject-matter jurisdiction focuses on the court's power to hear the claim, however, the court must give the plaintiffs factual allegations closer scrutiny when resolving a Rule 12(b)(1) motion than would be required for a Rule 12(b)(6) motion for failure to state a claim. Macharia v. United States, 334 F.3d 61, 64, 69 (D.C.Cir.2003); Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F.Supp.2d 9, 13 (D.D.C.2001). Moreover, the court is not limited to the allegations contained in the complaint. Hohri v. United States, 782 F.2d 227, 241 (D.C.Cir.1986), vacated on other grounds, 482 U.S. 64, 107 S.Ct. 2246, 96 L.Ed.2d 51 (1987). Instead, to determine whether it has jurisdiction over the claim, the court may consider materials outside the pleadings. Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C.Cir. 1992).

2. The Court Has Subject-Matter Jurisdiction Over the Claims Raised in the Third-Party Complaint

The third-party defendant argues that the court lacks subject-matter jurisdiction over the third-party complaint. Mot. at 3. A careful review of the third-party defendant's motion indicates a fundamental legal folly. Reese Teleservices rests its claim of no subject-matter jurisdiction on the premise that the court lacks subject-matter jurisdiction "over third-party defendant Reese Teleservices," arguing that the USPS failed to demonstrate that the third-party defendant is a successor in interest to Reese Brothers. Id. Federal subject-matter jurisdiction, however, rests not on the identity of the parties, or even on the merits or defenses underlying the case, but rather, on the court's power to entertain the matter. Akinseye, 339 F.3d at 971. Accordingly, the court looks to the legal theories upon which the USPS brings its third-party complaint to assess whether the case lies within the limited jurisdiction of a federal district court. Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673.

The USPS invokes the court's federal question jurisdiction to entertain questions arising under federal law. Third-Party Compl. ¶ 2 (citing 28 U.S.C. §§ 1331 and 1339). While § 1331 grants original jurisdiction over all federal laws and is, therefore, a catch-all for cases arising under federal legislation, § 1339 accords the court original jurisdiction specifically for cases "arising under any Act of Congress relating to the postal service." 28 U.S.C. § 1339.

In this case, the third-party complaint alleges that Reese Teleservices is liable under the FDCPA, 28 U.S.C. § 3001, Third-Party Compl. ¶ 48-54, which provides the "exclusive civil procedures for the United States ... to recover a judgment on a debt," 28 U.S.C. § 3001. The third-party defendant, arguing against subject-matter jurisdiction, claims that it is not legally obligated to the debts of Reese Brothers. Mot. at 3. Alas, Reese Teleservices's argument illuminates the fact that the issue of whether and to what extent the FDCPA extends liability to...