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United States Postal Serv. v. Postal Regulatory Comm'n

United States Court of Appeals, District of Columbia Circuit

April 8, 2014

UNITED STATES POSTAL SERVICE, PETITIONER
v.
POSTAL REGULATORY COMMISSION, RESPONDENT GAMEFLY, INC., INTERVENOR

Argued February 19, 2014

On Petition for Review of Orders of the Postal Regulatory Commission.

David C. Belt, Attorney, United States Postal Service, argued the cause for the petitioner. Morgan E. Rehrig, Attorney, was on brief. Stephan J. Boardman, Attorney, entered an appearance.

Jeffrey A. Clair, Attorney, United States Department of Justice, argued the cause for the respondent. Stuart F. Delery, Assistant Attorney General, Michael S. Raab, Attorney, Stephen L. Sharfman, General Counsel, Postal Regulatory Commission, R. Brian Corcoran, Deputy General Counsel, and Richard A. Oliver, Attorney, were on brief.

David M. Levy, John F. Cooney and Matthew D. Field were on brief for intervenor GameFly, Inc. in support of the respondent.

Before: HENDERSON and KAVANAUGH, Circuit Judges, and RANDOLPH, Senior Circuit Judge.

OPINION

Page 907

Karen LeCraft Henderson, Circuit Judge.

The United States Postal Service (USPS) seeks review of three orders of the Postal Regulatory Commission (Commission or PRC) implementing our mandate in GameFly, Inc. v. Postal Regulatory Commission ( GameFly I ), 704 F.3d 145, 403 U.S.App. D.C. 271 (D.C. Cir. 2013). In GameFly I, the PRC had found that USPS violated the proscription of " undue or unreasonable discrimination" in 39 U.S.C. § 403(c) when it refused to provide to GameFly, Inc. (GameFly), a company that rents and sells DVD video games by mail, the same special manual processing service for first class round-trip letter DVD mailers that USPS provided to Netflix, Inc. (Netflix), a company that rents DVD movies by mail.[1] Because of the disparate treatment, GameFly was forced to use USPS's more expensive first class " flat" mailer service to avoid DVD breakage in transit. We upheld the Commission's finding of discrimination but rejected the remedy it adopted--reducing the DVD flat service rate--because it left in place unjustified residual discrimination in that GameFly was still forced to pay a higher rate than Netflix paid to obtain comparable DVD protection. Accordingly, we remanded for the Commission to justify the residual discrimination or eliminate it entirely. On remand, the Commission adopted a remedy which equalizes the cost of first class letter and flat DVD rates, enabling GameFly (or Netflix or any other DVD mailer) to use either service at the same cost. We conclude the Commission's decision is consistent with our decision in Gamefly I and with the Postal Accountability and Enhancement Act (PAEA), Pub. L. No. 109-435, 120 Stat. 3198 (2006). Accordingly, we deny USPS's petition for review.

I.

In April 2009, GameFly filed a complaint with the PRC alleging that USPS granted preferential rates and terms of service to Netflix in violation of 39 U.S.C. § 403(c), which provides:

In providing services and in establishing classifications, rates, and fees under this title, the Postal Service shall not, except as specifically authorized in this title, make any undue or unreasonable discrimination among users of the mails, nor shall it grant any undue or unreasonable preferences to any such user.

Page 908

GameFly alleged that USPS routinely hand-processed round-trip DVD mailers Netflix mailed at the first class one-ounce letter rate of $0.44 each, while waiving the customary non-machineable surcharge for mail that cannot be machine-processed--but refused to provide the same service to GameFly. As a result, to avoid the risk of DVD breakage in the automated sorters, GameFly was forced to mail its games in DVD flat mailers at the more expensive first class flat rate of $0.88 ...


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