704 F.3d 145
D.C. Cir.2013Background
- GameFly and Netflix use USPS to mail DVDs; GameFly sues under 39 U.S.C. §3662(a) alleging undue discrimination in rates/terms under §403(c).
- PRC held USPS discriminated but remedy left residual discrimination in place; GameFly appeals.
- Commission rejected GameFly’s proposed remedies and crafted its own remedy, waiving second-ounce charge for flats and excluding nonmachinable surcharge for certain letter mail; residual disparity persisted.
- Commission’s explanation attributes remaining disparity to cost and presort differences between letter and flat mailers, not to GameFly’s choice of mailer.
- Record shows discrimination caused GameFly to be steered toward more expensive mailers; Netflix enjoys special manual processing at USPS’s expense.
- Court vacates PRC’s order, finds it arbitrary and capricious for leaving discrimination unexplained or unremedied, and remands for an adequate remedy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether residual discrimination after remedy is reasonable under §403(c). | GameFly argues residual disparity is unjustified. | The Commission says remaining disparity is justified by cost/presort differences. | Arbitrary and capricious; remand for full remedy. |
Key Cases Cited
- National Easter Seal Soc’y v. USPS, 656 F.2d 754 (D.C. Cir. 1981) (requires explanation for residual discrimination under §403(c))
- Motor Vehicle Mfrs. Ass’n of the U.S., Inc. v. State Farm Mut. Auto. Ins., 463 U.S. 29 (U.S. 1983) (agency must articulate rational connection and data support)
- Am. Fed’n of Gov’t Emps. v. FLRA, 470 F.3d 375 (D.C. Cir. 2006) (arbitrary and capricious standard; illogical results invalid)