The opinion of the court was delivered by: KESSLER
This case, brought by six stamp collectors and one stamp dealer against the United States Postal Service, involves a dispute over the fate of a postage stamp prepared by the Postal Service to commemorate Bill Pickett, a famous African-American cowboy. The Postal Service had intended to issue the stamp as part of its commemorative stamp program, in a 20-stamp sheet depicting American western celebrities and themes titled "Legends of the West." A few months before the Legends of the West stamps were scheduled to be officially distributed, the Postal Service discovered that the stamp featured a picture of Bill Pickett's brother rather than of Bill Pickett himself. Although the Postal Service recalled all of the stamps before their official release date, it soon learned that about 183 Legends of the West sheets containing the incorrect picture of Bill Pickett had been sold to private hands. Understandably, this very rare stamp quickly became a valuable item in the philatelic -- or stamp -- community and market.
Plaintiffs claimed that because they believed, based on a press release issued by Defendants, that the 5.2 million stamps bearing the same incorrect picture would be shortly destroyed by the Post Office, they invested between $ 2500 and $ 4700 to purchase the stamp. Nonetheless, to Plaintiffs' dismay, when the Postal Service learned that 183 stamps had escaped its recall, it changed its mind and decided to release 150,000 more of the stamps in order to "give everyone a chance to own a collectible." The release of these additional stamps will make Plaintiffs' stamps less rare, and, consequently, less valuable on the stamp market. Plaintiffs bring this lawsuit to prevent that result.
On September 29, 1994, Plaintiffs filed Motions for a Temporary Restraining Order and a Preliminary Injunction in this action. In these Motions, Plaintiffs requested that this Court enjoin the Defendants from selling or issuing the Legends of the West Pickett Error stamp sheets ("Pickett Error Sheets"); declare that the sale or issuance of those stamps violates the United States Constitution as well as the United States Postal Service ("Postal Service") regulations; and order the Defendants to destroy all remaining Pickett Error Sheets.
On September 30, 1994, the parties entered into a Joint Stipulation, approved by the Court, in which the Plaintiffs agreed that the Defendants may proceed with all of their plans to identify the orders to be fulfilled for the Pickett Error Sheets and to prepare to fulfill the orders. Defendants agreed that they would not sell, distribute, or transfer title to the Pickett Error Sheets until December 1, 1994, as the Postal Service had previously set for distribution of the Sheets. The parties further agreed that the Joint Stipulation would not affect any of the Postal Service's plans to identify and to prepare to fulfill Pickett Error Sheet orders. Finally, the parties agreed that the hearing on Plaintiff's Preliminary Injunction on October 28, 1994 would also serve as the final hearing on the dispositive motion and merits of this case.
Accordingly, this matter is now before the Court upon Plaintiffs' Motions for Temporary Restraining Order and Preliminary Injunction, and Defendants' Motion to Dismiss, or, in the Alternative, for Summary Judgment.
Plaintiffs include six stamp collectors and one stamp dealer. Complaint, PP 2-8. Plaintiffs are all owners of a stamp called the "Pickett Error" stamp. They each paid between $ 2500 and $ 4700 for the "Legends of the West" sheet of stamps containing this stamp.
Defendants include the United States Postal Service ("Postal Service"), Sam Winters, Chair of the Board of Governors of the Postal Service, and Marvin Runyon, Postmaster General. Complaint, PP 9 - 11.
Defendant Postal Service was established by the Postal Reorganization Act of 1970, Pub. L. 91-375, 84 Stat. 719 (August 12, 1970) (codified at Title 39, United States Code), as an independent entity of the United States Government responsible for providing postal service throughout the country. 39 U.S.C. §§ 101(a), 201. Among its many functions, the Postal Service is authorized to "provide and sell postage stamps and other stamped paper, cards, and envelopes", to provide "special[,]
nonpostal, or similar services", and "to provide philatelic services".
39 U.S.C. § 404(a). Pursuant to these provisions, the Postal Service markets postage stamps and other philatelic products.
Each year, the Postal Service issues approximately 40 to 41 billion stamps, of which nine billion are specially designed to honor and recognize events, people, and places that pertain to the cultural heritage of the United States. Declaration of Azeezaly S. Jaffer (Hereinafter, "Jaffer Dec.") P 2. Designs for such stamps are selected by the Citizens Stamp Advisory Committee. Id.
On May 21, 1993, the Citizens Stamp Advisory Committee approved designs featuring American western celebrities and themes for twenty commemorative stamps to be sold collectively as a sheet titled "Legends of the West." Jaffer Dec. P 3. The Postal Service scheduled the initial release of the sheets for March 29, 1994. Id. Production of the sheets commenced in August, 1993, and, shortly thereafter, 5.2 million "Legends of the West" sheets were distributed through normal channels directly from the production facilities to 330 postal facilities and stamp distribution offices throughout the country. Id.
On January 18, 1994, the Postal Service announced its decision not to issue the Pickett Error Sheets in their then current form. Jaffer Dec. P 4. Furthermore, after consultation with the Pickett family, the Postal Service decided that the Pickett Error Sheets would be recalled and destroyed, and that an accurate Legends of the West sheet would be created, produced, and issued at a later date. Id. In reaching its initial decision to destroy the Sheets, the Postal Service did not consider the market value of the Pickett Error Sheets, if they were prematurely sold. Id.
In accordance with its announced decision, the Postal Service issued a recall order on January 18, 1994, for all of the Pickett Error Sheets that had been distributed to postal facilities. Jaffer Dec. P 5. In a January 18, 1994 News Release, the Postal Service announced this recall, described the Postmaster General's explanation for the mistake, and attributed to the Postmaster General the statement that all of the Legends of the West stamps would be destroyed and reprinted with an accurate image of Bill Picket. Plaintiffs' Exhibit 3.
An audit of the Pickett Error Sheets returned by Postal facilities, conducted with the U.S. Postal Service Inspection Service, established that 183 of the Error Sheets were missing, and that those sheets had been prematurely sold at four offices. Jaffer Dec. P 5 Defendants did not authorize the sale of the sheets at these facilities. Jaffer Dec. P 6. The Postal Service counseled and disciplined those employees who prematurely sold the sheets. Id. The Postal Service contacted persons known to have purchased the Pickett Error Sheets and asked them to voluntarily exchange the defective sheets for validly issued postage stamps. Id. The Postal Service has also revised its procedures for distributing stamps. Id.
After the decision to recall the sheets was announced, the Postal Service received hundreds of requests from the public to reconsider the decision to destroy the Pickett Error Sheets. Jaffer Dec. P 7. When the audit was concluded, Azeezaly S. Jaffer, Manager, Stamp Services, U.S. Postal Service, conferred with Pickett family members regarding the 183 sheets that had been sold, and told them that the sold sheets would create a rarity in the philatelic community. Id. The Pickett family gave its reluctant acceptance to the proposed plan of the Postal Service to issue 150,000 more stamps to the public. Jaffer Dec. P 7.
In June of 1994, the Postal Service decided to offer 150,000 sheets to the public on a one-per-customer basis by mail order from the Postal Service's Philatelic Fulfillment Service Center. Jaffer Dec. P 8. Various factors contributed to this decision, including the avoidance of a philatelic rarity, the preservation of historical accuracy, the public's interest in the Pickett Error Sheets, the interests of the Pickett family, and the recovery of costs incurred by the Postal Service in producing the Pickett Error Sheets.
Jaffer Dec. P 8.
The Postal Service announced that it would destroy the remaining stock of the Pickett Error Sheets, pursuant to Mr. Jaffer's discussions with the Pickett family. Jaffer Dec. P 9.
The Postal Service considers the Pickett Error Sheets to be a defective product and does not seek or expect to profit from their sale. Jaffer Dec. P 10. Customers who mail requests (along with a check or money order for $ 8.70) postmarked between October 1, 1994 and October 31, 1994 addressed to the Postal Service's Philatelic Fulfillment Service Center in Kansas City, Missouri will meet the threshold eligibility requirement to purchase the sheets. Id.; Newsbreak, supra. The Postal Service will key orders into a database, identify eligible orders and respond to each entry that does not meet requirements or otherwise is not to be fulfilled under the procedures of the sale. Id. On or after December 1, 1994, the Postal Service will identify the orders to be filled and will mail and deliver Pickett Error Sheets to eligible purchasers. Contractors and postal employees will perform these functions at the Postal Service's expense. Id. The 150,000 Legends of the West sheets that are sold will be sealed in a protective sleeve bearing a message that the sheets are intended to be saved and not used and that the sheet contains an error in the image of Bill Pickett. Id.
The Postal Service stands to gain revenue in the amount of $ 1,305,000 in fulfilling orders for the sale. Jaffer Dec. P 15. If the Postal Service is unable to fulfill orders (i.e., because of an injunction) for the Sheets according to its announced plans, it will incur approximately $ 75,000.00 in wasted expenses that would not otherwise be incurred for processing, returning, and responding to orders, in addition to the in-house working hours and management attention required to terminate that process. Jaffer Dec. P 14. If at some later date an injunction is lifted and the Postal Service is then permitted to release the 150,000 Pickett Error Sheets, it will incur approximately $ 663,175 in new costs to duplicate advertising for, processing, and fulfulling of new orders. Jaffer Dec. P 16. As of October 11, 1994, the Postal Service received over 500,000 orders for the 150,000 Pickett Error Sheets. If the sale procedures are interrupted, all of these orders would have to be returned unfulfilled and then resubmitted and reprocessed at a later date if the sale is resumed. Jaffer Dec. P 17.
It is not disputed that the release of the 150,000 Pickett Error Sheets will reduce the value of the Pickett Error Stamps held by Plaintiffs, although the amount by which the value of the stamps will decrease is disputed. Although Plaintiffs contend that the value of their stamps will be reduced to approximately $ 100 after the release of the 150,000 Pickett Error Sheets, one of the Plaintiffs paid $ 4500 for his Pickett Error Sheet in "July or August, 1994" (Exh. 17) -- more than a month after the Postal Service issued its June 9, 1994 press release announcing the sale of the 150,000 additional stamps. At least as to that Plaintiff, the value of his Pickett Error Sheet was not diminished by the Postal Services June 9, 1994 announcement.
IV. Defendants' Motion To Dismiss Must Be Granted
A. The Postal Service's Decision To Distribute Pickett Error Sheets Is Not Judicially Reviewable.
Congress granted the Postal Service broad authority to "provide and sell postage stamps" and to "provide philatelic services." 39 U.S.C. § 404(a). In addition to granting the Postal Service this extensive authority, Congress also specifically exempted the Postal Service from the Administrative Procedure Act, 5 U.S.C. § 701 et seq. ("APA").
See 39 U.S.C. § 410(a); National Easter Seal Society for Crippled Children and Adults v. United States Postal Service, 211 U.S. App. D.C. 165, 656 F.2d 754, 767 (D.C. Cir. 1981). In this case, Plaintiffs' challenge to the Postal Service's philatelic marketing practices is similar to the types of action ...