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DOEHLA GREETING CARDS, INC. v. SUMMERFIELD

October 23, 1953

DOEHLA GREETING CARDS, Inc. et al.
v.
SUMMERFIELD et al.



The opinion of the court was delivered by: KEECH

This is an action to enjoin enforcement of increased parcel post zone rates as embraced within the order entitled Revision of Rates on Certain Fourth Class Mail, 18 F.R. 3967, effective October 1, 1953. The plaintiffs bring the action in their own behalf and on behalf of other users of the parcel post service similarly situated. The Postmaster General and the members of the Interstate Commerce Commission are sued as individuals and not in their official capacity. The case is before the court on the plaintiffs' motion for preliminary injunction and the defendants' motion to dismiss.

Summarized, the complaint alleges that the plaintiffs are users of the parcel post service who will be compelled to pay the increased rates; that the new rate order was promulgated without regard to the statutory limitations on the authority of the Postmaster General and Interstate Commerce Commission; that the Interstate Commerce Commission's investigation prior to its consent to the rate increases proposed by the Postmaster General was had without affording adequate notice or hearing to interested parties; that the order is arbitrary, capricious, discriminatory, and unsupported by the record; and that it deprives the plaintiffs of property without due process of law, in violation of their constitutional rights. The plaintiffs, distributors of greeting cards by direct selling, allege that enforcement of the increased parcel post zone rates will be seriously destructive and in some instances disastrous to their businesses; that the increased rate is so excessive in amount that it cannot be absorbed in their narrow margin of gross profit or transferred to the consumer; that no practicable alternative means of delivery is available to small towns and rural areas not served by transportation facilities other than parcel post; that, to the extent that physical facilities exist for diversion of shipments normally carried by parcel post, imposition of the alleged unlawful and excessive rates will result in major diversion of the parcel post traffic without commensurate opportunity for reduction of the expense of the postal service, and, correspondingly, in an irreparable and extensive financial loss to the United States and progressive deterioration and destruction of the parcel post service to the injury of the plaintiffs.

The basic statute governing the Post master General's power to fix parcel post rates is § 207 of the Act of February 28, 1925, as amended, 43 Stat. 1067, as amended by 45 Stat. 942, 39 U.S.C.A. § 247, which reads:

 'The classification of articles mailable, as well as the weight limit, the rates of postage, zone or zones, and other conditions of mailability under sections 240, 293, and 294 of this title if the Postmaster General shall find on experience that they or any of them are such as to prevent the shipment of articles desirable, or to permanently render the cost of the service greater than the receipts of the revenue therefrom, he is hereby directed, subject to the consent of the Interstate Commerce Commission after investigation, to re-form from time to time such classifications, weight limit, rates, zone or zones, or conditions, or either, in order to promote the service to the public or to insure the receipt of revenue from such service adequate to pay the cost thereof.'

 The other related statute, enacted September 27, 1950, as part of a supplemental appropriation act, 64 Stat. 1050, § 101, 31 U.S.C.A. § 695, provides:

 'Hereafter, none of the funds appropriated to the Post Office Department from the general fund of the Treasury shall be withdrawn from the Treasury until the Postmaster General shall certify in writing that he has requested the consent of the Interstate Commerce Commission to the establishment of such rate increases or other reformations (in addition to any specific increases or other reformations heretofore or hereafter authorized or prescribed by law), pursuant to the provisions of section 247 of Title 39, as may be necessary to insure the receipt of revenue from fourth-class mail service sufficient to pay the cost of such service: Provided, That the foregoing shall not be construed to require any increase in the postage rate, established by section 293c of Title 39, for publications or records furnished to a blind person.'

 The plaintiffs interpret the basic act to require the Postmaster General, in reforming the fourth class mail rates on a cost basis, to find that the current rates are such as to 'permanently render the cost of the service greater than the receipts of the revenue therefrom,' and to consider both promotion of the service to the public and the amount of revenue necessary to pay for the cost of the service. It is the plaintiffs' position that the 1950 appropriation act rider did not change the basic provisions of the statute, but merely directed the Postmaster General to exercise authority already conferred.

 The plaintiffs allege that in proposing the October 1, 1953, increase the Postmaster General acted outside these statutes in that (1) he did not find that the former rates were such as to permanently render the cost of service greater than the receipts therefrom and (2) the rate increase was determined on the basis of the need for revenue without considering the element of public service. The plaintiffs further allege that the Postmaster General acted arbitrarily and capriciously in severing consideration of the parcel post zone rates from that of rates on catalogs and controlled circulation publications, other subclassifications of fourth class mail. The plaintiffs contend that the members of the Interstate Commerce Commission acted arbitrarily and capriciously and beyond their authority in failing to make an 'investigation' conforming to the usual rate-making type of investigation and in consenting to a rate increase which was not supported by the record.

 Plaintiffs allege that this court has jurisdiction of the case under either 28 U.S.C.A. § 1339, which gives the district courts jurisdiction of cases involving the postal laws, or 5 U.S.C.A. § 1009, the section of the Administrative Procedure Act providing for judicial review.

 The defendants move to dismiss the complaint on the following grounds: (1) The complaint does not present a justiciable controversy over which the court has jurisdiction; (2) the plaintiffs have to standing to maintain suit; (3) the court has no jurisdiction over the subject matter of the suit, in that it is in effect a suit against the United States to which the United States has not consented; (4) the court is without jurisdiction to review a discretionary act of the defendants, and (5) the plaintiffs have failed to join an indispensable party, the Postmaster General. On behalf of the individual members of the Interstate Commerce Commission, the further ground is stated that the matter is moot, since they have exhausted their power and have nothing pending before them in connection with the rate order in question.

 As to the first and second grounds of their motion to dismiss, the defendants rely on the principle that in order to contest the validity of administrative action, plaintiffs must show that such action invades a private substantive legally protected interest recognized by common law or created by statute, as distinguished from the public's interest in the administration of law. Defendants argue that there is no question here of depriving an individual of the right to use the mails; that the increased rates apply equally to all users of the parcel post similarly situated; that the plaintiffs have no vested legal rights in the continuance of any particular schedule of rates for parcel post deliveries; that even though plaintiffs suffer financial loss through the rate increases, without an invasion of some legally protected interest, the plaintiffs' injury is damnum absque injuria. The correctness of the legal principle cannot be challenged.

 The real question presented by the complaint is whether the plaintiffs have alleged an invasion of a legally protected right. The defendants cite a number of cases holding that the United States has a proprietary right and interest in the postal service, *fn1" from which they conclude that the establishment of rates for carrying mail is a strictly proprietary function and within the absolute discretion of the Postmaster General.

 As stated by our Court of Appeals in Pike v. Walker, 1941, 73 App.D.C. 289, 121 F.2d 37, 39, certiorari denied 314 U.S. ...


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