Silver v. U.S. Postal Service, 89-16447

• Decision Date: 11 December 1991
• Docket Number: No. 89-16447,89-16447
• Citation: 951 F.2d 1033
• Parties: Bernard L. SILVER, Cartwright-Mitchell, Inc., a Delaware corporation, Plaintiffs-Appellants, v. UNITED STATES POSTAL SERVICE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1033

951 F.2d 1033

Bernard L. SILVER, Cartwright-Mitchell, Inc., a Delaware corporation, Plaintiffs-Appellants, v. UNITED STATES POSTAL SERVICE, Defendant-Appellee.

No. 89-16447.

United States Court of Appeals Ninth Circuit.

Argued and Submitted March 13, 1991.

Decided Dec. 11, 1991.

Dale B. Hinson, Washington, D.C. and W. Leslie Sully, Jr., Sully, Lenhardt & Raizin, Las Vegas, Nev., for plaintiffs-appellants.

Irene M. Solet, U.S. Dept. of Justice, Washington, D.C., for defendant-appellee.

Appeal from the United States District Court for the District of Nevada.

Before GOODWIN, THOMPSON and O'SCANNLAIN, Circuit Judges.

PER CURIAM:

This appeal squarely raises the constitutionality of the statute creating the Board of Governors of the United States Postal Service.

I

In September 1986, the Postal Service's General Counsel filed a complaint against Bernard L. Silver alleging that Silver was engaged in a scheme to obtain money or property through the mails by means of false representations, in violation of 39 U.S.C. § 3005. The General Counsel alleged that Silver, operating through his business Cartwright-Mitchell, Inc., made representations in advertisements that his product, Mammrae-9000, would cause a female user's breasts to grow larger, and that such representations were materially false.

A hearing was held before an Administrative Law Judge ("ALJ"). The Postal Service presented testimony from an expert in medicine and an expert in consumer psychology and marketing. Silver presented the testimony of his business manager, the president of the firm that manufactures Mammrae-9000, and an expert in advertising and consumer behavior. The ALJ entered an Initial Decision in favor of the Postal Service.

Silver appealed to the Postal Service Judicial Officer. The Judicial Officer found that the ALJ's ruling was supported by a preponderance of the evidence and made no errors of law. The Postal Service issued a cease and desist order barring Silver from continuing his representations about breast enlargement, and issued orders that Silver's mail relating to Mammrae-9000 be returned to sender and that Postal Money Orders drawn to Silver's order not be paid.

In July 1988, Silver and Cartwright-Mitchell, Inc. ("Silver") filed suit in the United States District Court for the District of Nevada against the Postal Service. ¹ Silver sought injunctive relief to prevent the enforcement of the cease and desist and other orders, alleging them to be arbitrary and capricious and not supported by substantial evidence, that Silver had been denied due process, that his free speech rights had been unconstitutionally infringed, and that separation of powers principles were violated in the creation of the Postal Service. The parties made cross motions for summary judgment and the district court granted the Postal Service's motion and denied Silver's. The district court entered a final order and Silver timely filed notice of appeal.

II

Silver argues that the Postal Service lacks enforcement powers under the Constitution because it is not part of the executive branch, and because the Postal Service Board of Governors (the "Board") has members whose appointment procedures violate the Appointments Clause, U.S. Const. art. II, § 2, cl. 2. We address these arguments in turn.

A

Under our three-branch scheme of government, the President (as head of the executive branch) is assigned exclusive responsibility to "take Care that the Laws be faithfully executed." U.S. Const. art. II, § 3. Silver contends that the Postal Service is not part of the executive branch of the federal government and hence lacks the authority to enforce federal law.

To support his argument, Silver points to sections of Title 5 of the United States Code, which concerns government organization. Silver notes that the Postal Service is not included in the list of executive departments or government corporations. See 5 U.S.C. §§ 101, 103.

The mere fact that the Postal Service is not designated a department or government corporation, however, does not mean it is not a part of the executive branch. When Congress created the Postal Service, it made the Postal Service "an independent establishment of the executive branch of the Government of the United States." 39 U.S.C. § 201. Under the Postal Reorganization Act of 1970 ("PRA"), Congress changed the management structure of the Post Office for the purported purpose of making its operations more "businesslike." H.R.Rep. No. 1104, 91st Cong., 2d Sess. 13, reprinted in 1970 U.S.Code Cong. & Admin.News 3649, 3660. Nonetheless, Congress could not have made its intent more clear that the Postal Service was to remain a part of the U.S. Government and to perform executive branch functions within that government. In addition to the clear language of section 201, the first sentence of the PRA as codified states: "The United States Postal Service shall be operated as a basic and fundamental service provided to the people by the Government of the United States...." 39 U.S.C. § 101(a).

Silver cites language from section 104 of Title 5 to support his claim that the Postal Service is not part of the executive branch. The very language he quotes, however, seems to make the opposite point. Section 104 reads: "For the purpose of [Title 5--Government Organization and Employees], 'independent establishment' means--(1) an establishment in the executive branch (other than the United States Postal Service or the Postal Rate Commission)...." 5 U.S.C. § 104. It is only because the Postal Service is "an establishment of the executive branch" as that term is generally understood that the drafters of section 104 found it necessary to make an exception for the Postal Service for certain definitional purposes under Title 5.

That the Postal Service is not an organization independent of the United States government is also indicated by several other facts. Employees of the Postal Service are part of the Civil Service system. 39 U.S.C. § 1001(b). The standards of suitability, security, and conduct of chapter 73 of Title 5 that apply to all federal employees apply likewise to Postal Service employees. 39 U.S.C. § 410(b)(1). Federal criminal laws that pertain to federal employees also apply to Postal Service employees. 39 U.S.C. § 410(b)(2). The Postal Service has the authority to borrow money backed by the full faith and credit of the United States government. 39 U.S.C. § 2006(c). The Postal Service must annually submit a budget to the Office of Management and Budget. 39 U.S.C. § 2009. Enforcement actions of the Postal Service are not self-enforcing and the Postal Service is dependent upon the Justice Department to bring action in court to obtain civil penalties against violators. 39 U.S.C. § 409(d).

No court has ever held the Postal Service not to be a part of the executive branch. One court has expressly held that the Postal Service is part of the executive branch. See Friedlander v. U.S. Postal Service, 658 F.Supp. 95 (D.D.C.1987). Moreover, as the Friedlander court noted, "[o]ther courts have assumed without question that the Postal Service is a governmental entity within the executive branch." Id. at 101 (citations omitted). We have no doubt that the Postal Service is a part of the executive branch of the United States government.

B

Silver further contends that even if the Postal Service is structurally a part of the executive branch, the President's executive powers have not been properly delegated to the Postal Service in accordance with the Appointments Clause. ²

Article II § 2 cl. 2 of the Constitution states:

[The President] shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other Public Ministers and Consuls, Judges of the Supreme Court, and all other Officers of the United States, whose Appointments are not herein provided for, and which shall be established by Law; but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.

The proper method of appointment hinges upon the nature of the position in question. The Appointments Clause "divides all its officers into two classes." United States v. Germaine, 99 U.S. 508, 509, 25 L.Ed. 482 (1878). "Principal officers are selected by the President with the advice and consent of the Senate. Inferior officers Congress may allow to be appointed by the President alone, by the heads of departments, or by the Judiciary." Buckley v. Valeo, 424 U.S. 1, 132, 96 S.Ct. 612, 688, 46 L.Ed.2d 659 (1976). These requirements apply to "any appointee exercising significant authority pursuant to the laws of the United States." Id. at 126, 96 S.Ct. at 685. Individuals who are merely employees of the United States government do not implicate the Appointments Clause. Id. at 126 n. 162, 96 S.Ct. at 685 n. 162.

While Congress may not delegate itself a role in the appointment process, Buckley, 424 U.S. at 127, 96 S.Ct. at 686, and Congress may not retain control over officers delegated executive functions, Bowsher v. Synar, 478 U.S. 714, 734, 106 S.Ct. 3181, 3191, 92 L.Ed.2d 583 (1986), the Constitution affords Congress substantial discretion to fashion appointments within the specified constraints. "But as the Constitution stands, the selection of the appointment power, as between the functionaries named, is a matter resting in the discretion of Congress." Ex Parte Siebold, 100 U.S. 371, 397-98, 25 L.Ed. 717 (1880). The Supreme Court recognized this fact in upholding the appointment process of the special prosecutor in the Ethics in Government Act, 28 U.S.C. §§ 49, 591-99. "Indeed, the inclusion of 'as they think proper' seems clearly to give Congress significant discretion to determine whether it is 'proper' to vest the appointment of, for example, executive officials in the 'courts of Law.' " Morrison v. Olson, 487 U.S. 654, 673, 108 S.Ct....