UPS Worldwide Forwarding v. US Postal Service, Civ. A. No. 93-340-JLL.

• Decision Date: 16 May 1994
• Docket Number: Civ. A. No. 93-340-JLL.
• Citation: 853 F. Supp. 800
• Parties: UPS WORLDWIDE FORWARDING, INC., Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.
• Court: U.S. District Court — District of Delaware

853 F. Supp. 800

UPS WORLDWIDE FORWARDING, INC., Plaintiff, v. UNITED STATES POSTAL SERVICE, Defendant.

Civ. A. No. 93-340-JLL.

United States District Court, D. Delaware.

May 16, 1994.

COPYRIGHT MATERIAL OMITTED

Arthur G. Connolly, Jr., Connolly, Bove, Lodge & Hutz, Wilmington, DE, and Robert L. Kendall, Jr., John E. McKeever, Maureen Murphy McBride, and Karen L. Tomlinson, Schnader, Harrison, Segal & Lewis, Philadelphia, PA, of counsel, for plaintiff.

Richard G. Andrews, U.S. Atty., and Nina A. Pala, Asst. U.S. Atty., Wilmington, DE, Frank W. Hunger, Asst. Atty. Gen., Theodore C. Hirt and Andrea M. Sharrin, U.S. Dept. of Justice, Federal Programs Branch, and William T. Alvis, U.S. Postal Service, Washington, DC, of counsel, for defendant.

Robert K. Payson, Kathleen Furey McDonough, and Joanne Ceballos, Potter, Anderson & Corroon, Wilmington, DE, and L. Peter Farkas, Graham & James, Washington, DC, of counsel, for proposed-intervenor Air Courier Conference of America.

OPINION

LATCHUM, Senior District Judge.

I. BACKGROUND

On July 22, 1993, plaintiff, UPS Worldwide Forwarding, Inc. (hereinafter "UPS"), filed its complaint against defendant, United States Postal Service (hereinafter "POSTAL SERVICE"), alleging that the Postal Service's new international mail agreement, International Customized Mail (hereinafter "ICM") Service, violates various provisions of the Postal Reorganization Act (hereinafter "PRA"), specifically 39 U.S.C. §§ 101(d), 403(b)-(c), and 407(a).¹ (Docket Item "D.I." 1.) In response to the Postal Service's motion to dismiss for lack of standing, or alternatively, pursuant to Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted, (D.I. 5), UPS filed its amended complaint on November 2, 1993, alleging more specifically that it was threatened with a substantial loss of business due to the Postal Service's ICM Service. (D.I. 14, ¶¶ 19, 21.) Meanwhile, on October 19, 1993, Air Courier Conference of America/International Committee (hereinafter "ACCA"), an unincorporated membership association consisting of firms engaged in providing letter and parcel delivery services in the United States and between the United States and foreign countries, moved for leave to intervene pursuant to Rule 24(b) of the Federal Rules of Civil Procedure. (D.I. 10.) On November 16, 1993, the Postal Service filed its motion to dismiss the amended complaint. (D.I. 17.) UPS responded with its motion for summary judgment, filed January 14, 1994. (D.I. 28.) On April 7, 1994, the Court heard oral argument on plaintiff's motion for summary judgment, defendant's motion to dismiss the amended complaint, and ACCA's motion to intervene. Before the Court now for consideration are the various motions of these parties.

II. FACTS

On May 24, 1993, the Postal Service established its new ICM Service, which is available to customers who are capable of tendering large quantities of international mail. (D.I. 6 at 5.) Specifically, the ICM Service allows the Postal Service to negotiate individually with customers who are capable of mailing annually either one million pounds of international mail or two million dollars of international postage, and the customer must also be capable of tendering such international mail from a single location. (D.I. 6 at 6.)

In its complaint, UPS alleges that: (1) the PRA does not authorize the Postal Service to negotiate individual prices and that international service rates must be uniform for all mailers sending the same type of mail to the same destination (D.I. 14 at ¶¶ 13-18); (2) it is not possible to determine whether the Postal Service is making the same terms available to similarly-situated customers because it does not disclose certain elements of the ICM Service (D.I. 14 at ¶ 22); and (3) the ICM Service has been adopted without consent of the President of the United States as is required by the PRA (D.I. 14 at ¶¶ 26-28).

Defendant, the Postal Service, argues that: (1) UPS lacks standing to challenge the ICM Service (D.I. 18 at 10-18); (2) ICM is not in contravention to the PRA (D.I. 18 at 18-28); and (3) presidential consent is not required (D.I. 18 at 28-38).

Plaintiff seeks a permanent injunction restraining the Postal Service from entering into ICM agreements or from rendering ICM Service and from otherwise rendering international mail service to individual mailers at prices different from the rates established for the public at large. (D.I. 14 at 7-8.)

III. APPLICABLE LAW

As stated above, defendant moved to dismiss for failure to state a claim under Fed. R.Civ.P. 12(b)(6) and for lack of standing. Fed.R.Civ.P. 12(b) provides that if a motion is made under Rule 12(b)(6) for failure to state a claim upon which relief can be granted, and "matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56." Fed.R.Civ.P. 12(b). See also Pfizer, Inc. v. Elan Pharmaceutical Research Corp., 812 F.Supp. 1352, 1357 (D.Del. 1993). Additionally:

Since a motion to dismiss for lack of standing does not raise a question going to the merits of the controversy, it may be treated as a motion to dismiss for failure to state a claim for relief, and if matters outside the pleadings are admitted by the court, the motion may be treated as one for summary judgment.

5A Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1360, at 436 (1990). See also Pfizer, 812 F.Supp. at 1357-58. Therefore, the motions to dismiss, along with the motion for summary judgment, will all be treated as motions for summary judgment. However, since all parties concede that there are no genuine issues of material fact, this case essentially becomes a question of statutory interpretation. The Court will now address the legal issues which are in dispute.

IV. DISCUSSION

A. STANDING

The question of standing "involves both constitutional limitations on federal-court jurisdiction and prudential limitations on its exercise." Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975). In order to meet the standing requirement, the plaintiff must satisfy the requirements of Article III as well as prudential considerations that have evolved from judicial precedent. Valley Forge Christian College v. Americans United For Separation of Church and State, 454 U.S. 464, 471, 102 S.Ct. 752, 757-758, 70 L.Ed.2d 700 (1982).

The constitutional standing requirement has three elements. The plaintiff must show: (1) that it "suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant"; (2) that the injury is fairly traceable to the challenged action; and (3) that it "is likely to be redressed by a favorable decision." Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758 (citations omitted). First, it is undisputed that UPS is a competitor of the Postal Service and that UPS has authority to compete in the international parcel delivery market. 39 CFR § 320.6 (1993). Second, the Postal Service by its own admission has enacted the ICM agreements with the intent to pull business away from UPS and other international delivery services.² As a result of the Postal Service's actions, UPS could lose substantial business in the international postal market. Plaintiff has established that the new ICM service will cause a direct, imminent injury by eroding UPS' client base. Plaintiff has met the causation test, because it is clear that any harm would be attributable to the fact that former UPS customers are now engaging in the ICM service agreements with the Postal Service. Finally, if the Court were to enjoin the ICM agreements, the harm suffered by UPS would be extinguished. Thus, plaintiff has met the constitutional standing requirement.

In order to satisfy the prudential standing requirement: (1) "the plaintiff generally must assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties"; and (2) "the plaintiff's complaint must fall within `the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.'" Valley Forge, 454 U.S. at 474-75, 102 S.Ct. at 760. First, UPS has a legally protected right to compete in the international parcel delivery market pursuant to 39 C.F.R. § 320.6. The plaintiff is asserting that its legal right to compete is being harmed by the ICM agreements which the Postal Service admits are intended to attract customers from its competitors such as UPS. Second, as the Supreme Court has explained, the "zone of interests" test is not meant to be especially demanding and there does not have to be an indication that Congress, in enacting the PRA, intended to benefit the would-be plaintiff. Clarke v. Securities Industry Assn., 479 U.S. 388, 399-400, 107 S.Ct. 750, 757, 93 L.Ed.2d 757 (1987). It is unclear who would have standing to challenge the ICM agreements, if not a competitor. Certainly, a mailer who is able to get a better deal from the Postal Service than from UPS would not challenge the ICM agreements. Additionally, the Postal Service concedes that, "as a competitor of the Postal Service in international mail, UPS has standing to complain of allegedly unlawful rates only to the extent that it is harmed as a competitor." (D.I. 18 at 14.) Therefore, the Court concludes that UPS possesses the requisite standing to bring and maintain this lawsuit.

B. LACK OF AUTHORITY UNDER THE PRA TO ENTER INTO ICM

UPS argues that the ICM agreements violate: (1) sections 403(b)(2) and 407 of the PRA because the Postal Service is required to establish international rates for types of service and for categories of mail and mail users; (2) section 403(c) of the PRA which prohibits the Postal Service from unreasonably discriminating among mailers; and (3) section 101(d) of the PRA because the Postal Service is required to establish...