Sears, Roebuck & Co. v. United States Postal Service
2016 U.S. App. LEXIS 22595
| D.C. Cir. | 2016Background
- In 2009 Sears, Segerdahl, and Aspen mailed >8.2 million folded self-mailers and paid discounted automation postage rates after certifying compliance with Postal Service sealing rules in the Domestic Mail Manual (DMM) §201.3.14.1c (May 11, 2009).
- DMM §201.3.14.1c required that for pieces 7 inches long or more "the piece must be sealed on the top and the bottom" and that the left (trailing) edge and other open edges be secured with at least one tab or glue line.
- Appellants’ mailers had two elongated glue lines placed along the trailing (left) edge that extended close to, but not literally on, the top and bottom edges.
- The Postal Service assessed revenue deficiencies (~$1.25 million total) because the top and bottom edges were not separately sealed; the PCSC upheld the assessments, finding the trailing-edge glue did not satisfy the top/bottom sealing requirement.
- The district court enforced the PCSC decisions and awarded the revenue deficiencies plus a 10% statutory surcharge; this Court affirms the deficiencies but (per the Government’s confession of error) vacates the surcharge award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Postal Service’s interpretation of the DMM sealing requirement (that pieces ≥7" must be sealed on top and bottom) was consistent and subject to review under Chenery | Appellants: PCSC and agency counsel later advanced inconsistent constructions; the agency relied on a post-hoc/new interpretation, violating Chenery | USPS: The PCSC consistently required a seal "on" top and bottom; investigatory memoranda noting a ‘‘center tab’’ were not the PCSC’s holding; counsel’s elaborations merely clarified, not changed, the agency’s position | Court: Rejected Appellants’ Chenery challenge; PCSC’s rationale was the operative agency action and was consistent throughout |
| Whether seals placed close to but not on the top/bottom edges satisfied the DMM requirement and justified eligibility for automation rates | Appellants: Left-edge glue lines that extended near top/bottom effectively sealed those edges and satisfied the rule (rule does not specify exact placement) | USPS: The Manual and Quick Service Guide show separate sealants on each open edge; glue near the top/bottom does not equal sealing those edges as required | Court: Held the Postal Service’s interpretation reasonable; glue near but not on the edges did not meet the requirement; affirm revenue deficiencies |
| Proper standard and scope of judicial review for Postal Service manual interpretations | Appellants: Agency must not rely on post-hoc rationalizations; review should enforce that constraint | USPS: Agreed to “reasoned decision-making” standard; the PCSC provided adequate contemporaneous justification | Court: Applied reasoned decision-making standard (deference) and found the PCSC’s decisions adequately explained and reasonable |
| Whether the district court’s 10% statutory surcharge was proper | Appellants: Challenged award as improper | USPS: Later confessed error and conceded surcharge was not collectible in these circumstances | Court: Vacated the surcharge award per Government confession of error |
Key Cases Cited
- SEC v. Chenery Corp., 318 U.S. 80 (U.S. 1943) (agency action must be upheld on the grounds the agency actually relied upon)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (agency action must reflect reasoned decision-making)
- Carlin v. McKean, 823 F.2d 620 (D.C. Cir. 1987) (judicial review provisions of APA generally inapplicable to Postal Service; limited non-APA review exists)
- Aid Ass’n for Lutherans v. USPS, 321 F.3d 1166 (D.C. Cir. 2003) (scope of non-APA judicial review for Postal Service decisions)
- N. Air Cargo v. USPS, 674 F.3d 852 (D.C. Cir. 2012) (Chenery constraints apply to Postal Service adjudications)