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Reese Brothers, Inc. v. United States Postal Service

March 5, 2007

REESE BROTHERS, INC., PLAINTIFF,
v.
UNITED STATES POSTAL SERVICE, DEFENDANT/COUNTERCLAIM PLAINTIFF,
v.
REESE TELESERVICES, INC., AND RESOURCES GROUP, LLC D/B/A TGR HOLDINGS, INC., COUNTERCLAIM DEFENDANTS.



The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Document No.: 24

MEMORANDUM OPINION DENYING THIRD-PARTY DEFENDANT REESETELESERVICES,INC.'SMOTION TO DISMISS

I. INTRODUCTION

The plaintiff, Reese Brothers, Inc. ("Reese Brothers"), is a for-profit telemarketing company which is no longer in business. Reese Brothers claims that the United States Postal Service ("USPS" or "Postal Service") improperly required it to pay standard postage rates for mailings associated with its solicitations for donations for its non-profit clients. The plaintiff brings various constitutional and statutory claims. Responding to a counterclaim filed by the United States, Reese Teleservices, Inc. ("Reese Teleservices") filed a motion to dismiss, claiming that the court lacked subject-matter and personal jurisdiction and that the United States failed to state a claim. Because the court has subject-matter jurisdiction over the United States' counterclaim under the Federal Debt Collection Procedures Act ("FDCPA"), because third-party defendant Reese Teleservices has sufficient minimum contacts with the United States, and because the USPS has stated a valid claim against it, the court denies Reese Teleservices's motion.

II. BACKGROUND

A. Factual Background

Reese Brothers is a formerly operating for-profit telemarketing company. Compl. ¶ 9. While in operation, the plaintiff contracted with non-profit entities to provide them with telemarketing solicitation and direct mail consulting services. Id. As part of its operation, the plaintiff routinely sent mailings to prospective donors. Id. Following an investigation into the plaintiff's business practices in 1998, the United States Postal Service charged the plaintiff with improperly availing itself of discounted postage rates available only to non-profit entities and for-profit entities acting as agents of non-profit entities. Id. ¶ 14. Basically, the Postal Service concluded that the contractual arrangement between Reese Brothers and its non-profit clients rendered Reese Brothers ineligible for the discounted postage rates. Id. ¶ 16.

In response to Reese Brothers' alleged under-payments (representing the differences between the non-profit postage rate and the standard postage rate), the Postal Service sought a total of $3,600,068.23. Id. ¶¶ 14, 20. After a lengthy administrative appeals process, including the plaintiff's request for forbearance, the Postal Service agreed to forgive $1,953,790.28 of the plaintiff's debt, reducing the amount the plaintiff owes to $1,646,277.95. Id. ¶ 29 & Ex. I.

B. Procedural Background

Attempting now to avoid any payment to the Postal Service, the plaintiff brings suit alleging 17 independent causes of action. The plaintiff's first ten causes of action allege violations of constitutional rights.*fn1 Compl. ¶¶ 39-48. The remaining seven counts allege that the USPS exceeded its statutory authority under the legal theories that the USPS' conduct constitutes ultra vires, id. ¶ 49, is contrary to Congress' intent, id. ¶ 50, and is arbitrary and capricious, id. ¶¶ 51-55.

The defendant filed a counterclaim and third-party complaint on June 27, 2006, against Reese Teleservices and TRG Holdings, LLC, seeking to collect the debts incurred by plaintiff Reese Brothers. In its third-party complaint, the USPS claims that Reese Teleservices is liable for the debts of Reese Brothers because Reese Teleservices "acquired Reese in December of 2002, and is successor in interest[.]" Third Party Compl. ¶ 53.

The USPS brings its third-party complaint under 39 U.S.C. § 2601(a) and 2605, and under the FDCPA, 28 U.S.C. § 3001 et seq. Third-Party Compl. ¶ 2.

In place of an answer to the third-party complaint, Reese Teleservices filed a motion to dismiss on August 16, 2006. In its motion to dismiss, the Reese Teleservices argues that the court lacks subject-matter jurisdiction and personal jurisdiction and that the third-party complaint fails to state a claim. Third-Party Def.'s Mot. to Dismiss ("Mot."). The court turns now resolve these matters.

III. ANALYSIS

The Court Denies the Third-Party Defendant's Motion to Dismiss The third-party defendant raises three distinct arguments in support of its motion to dismiss the third-party complaint. First, the third-party defendant argues that the court "lacks subject-matter jurisdiction over third-party defendant Reese Teleservices[.]" Mot. at 3. Next, the third-party defendant claims that the court lacks personal jurisdiction over Reese Teleservices.

Id. at 4. Finally, it claims that the third-party complaint fails to state a claim upon which relief can be granted. Id. at 5. For the reasons that ...


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