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Reese Brothers, Inc. v. United States Postal Service

January 23, 2008

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. 31

MEMORANDUM OPINION

CONCLUDING THAT THE PLAINTIFF HAS STANDING TO RAISE THE CONSTITUTIONAL CLAIMS OF ITS FORMER CLIENTS

I. INTRODUCTION

The plaintiff, Reese Brothers, Inc. ("Reese Brothers"), is a defunct for-profit telemarketing company. Reese Brothers claims that the United States Postal Service ("the Postal Service") improperly required the plaintiff to pay standard postage rates for mailings associated with its solicitations for donations to its non-profit clients. The plaintiff brings various constitutional and statutory claims. Because the plaintiff's constitutional claims assert the constitutional rights of third-party non-profit entities, the court ordered the plaintiff to show cause why the court should not dismiss the plaintiff's constitutional claims sua sponte for lack of standing. On review of the parties' briefing, the court concludes that the plaintiff has third-party standing to prosecute its claims.

II. BACKGROUND

Reese Brothers is a quondam 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, the Postal Service, in 1998, 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.

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 award 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.

Attempting now to avoid any payment to the Postal Service, the plaintiff brings suit alleging 17 independent causes of action. In its first 10 causes of action, the plaintiff alleges violations of constitutional rights of third-party former non-profit clients. Whether Reese Brothers has standing to adjudicate these claims on the merits is the question now under consideration.

III. ANALYSIS

1. Legal Standard for Standing

Article III of the Constitution limits the jurisdiction of federal courts to cases or controversies. U.S. CONST. ART. III, § 2, cl. 1.These prerequisites reflect the "common understanding of what it takes to make a justiciable case." Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 102 (1998). Consequently, "a showing of standing is an essential and unchanging predicate to any exercise of a court's jurisdiction." Fla. Audubon Soc'y v. Bentsen, 94 F.3d 658, 663 (D.C. Cir. 1996) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)). As the party invoking federal jurisdiction, the plaintiff bears the burden of establishing standing. Defenders of Wildlife, 504 U.S. at 561; Steel Co., 523 U.S. at 104; City of Waukesha v. EPA, 320 F.3d 228, 233 (D.C. Cir. 2003) (per curiam).

To demonstrate standing, a plaintiff must satisfy a three-pronged test. Sierra Club v. EPA, 292 F.3d 895, 898 (D.C. Cir. 2002) (citing Defenders of Wildlife, 504 U.S. at 560). First, the plaintiff must have suffered an injury in fact, defined as a harm that is concrete and actual or imminent, not conjectural or hypothetical. Byrd v. EPA, 174 F.3d 239, 243 (D.C. Cir. 1999) (citing Steel Co., 523 U.S. at 103). Second, the injury must be fairly traceable to the governmental conduct alleged. Id. Finally, it must be likely that the requested relief will redress the alleged injury. Id. The D.C. Circuit has made clear that no standing exists if the plaintiff's allegations are "purely speculative[, which is] the ultimate label for injuries too implausible to support standing." Tozzi v. Dep't of Health & Human Servs., 271 F.3d 301, 307 (D.C. Cir. 2001). Nor is there standing where the court "would have to accept a number of very speculative inferences and assumptions in any endeavor to connect the alleged injury with [the challenged conduct]." Winpisinger v. Watson, 628 F.2d 133, 139 (D.C. Cir. 1980).

Ordinarily, a plaintiff must "assert his own legal rights and interests, and cannot rest his claim to relief on the legal rights or interests of third parties." Warth v. Seldin, 422 U.S. 490, 499 (1975); see also Allen v. Wright, 468 U.S. 737, 751 (1984). If the plaintiff meets three conditions, however, the court may conclude that the plaintiff asserting another's rights has jus tertii or "third party standing." Sec'y of Md. v. Joseph H. Munson Co., 467 U.S. 947, 956 (1984). First, the plaintiff must have suffered an actual injury, although not necessarily one to its own legally protected interests. Powers v. Ohio, 499 U.S. 400, 411 (1991). Second, the plaintiff must have a close relationship with the party whose rights he or she is asserting, "thus giving him or her a 'sufficiently concrete interest' in the ...


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