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National Star Route Mail Contractors Association, Inc. v. United States Postal Service

United States District Court, District of Columbia

December 19, 2016

NATIONAL STAR ROUTE MAIL CONTRACTORS ASSOCIATION, INC., Plaintiff
v.
UNITED STATES POSTAL SERVICE, Defendant

          MEMORANDUM OPINION

          COLLEEN KOLLAR-KOTELLY United States District Judge

         This case arises out of the U.S. Postal Service's incipient efforts to comply with an arbitration decision and award that resolved a grievance by the American Postal Workers Union relating to the Postal Service's award of private contracts for transport of the mail without prior notice to the Union. Having found that the Postal Service had engaged in willful, “wholesale and repeated violations of its obligations” to the Union under the Collective Bargaining Agreement, the arbitrator ordered the Postal Service to convert the 110 disputed routes (or other routes as agreed to with the Union) to routes to be staffed by Union members; the arbitration award allows the Postal Service six months, or until February 18, 2017, which can be extended by agreement, to complete this conversion. U.S. Postal Serv. v. Am. Postal Workers Union, AFL-CIO, Case No. Q06C-4Q-C 11182451, at *16, 20 (Aug. 18, 2016) (Das, Arb.) (“Arbitration Award”).[1]

         Among the contracts addressed in the Arbitration Award are those held by members of the National Star Route Mail Contractors Association (“Plaintiff” or “Plaintiff Association”). On November 30, 2016, Plaintiff initiated this action and on December 2, 2016, requested expedited hearing upon its Motion for Temporary Restraining Order and Preliminary Injunction. Plaintiff seeks declaratory and injunctive relief to prevent the Postal Service “from taking any action to implement the portion of the August 18, 2016[, ] arbitration award that directs the Postal Service to Terminate up to 110 highway mail transportation routes currently served by contractors so that the routes may be served by Postal Service employees.” Pl. Mot. for TRO & PI at 1.

         Before the Court are Plaintiff's [6] Motion for Temporary Restraining Order and Preliminary Injunction and the [14] Motion to Dismiss by Defendant United States Postal Service (“USPS” or “Postal Service”), in which [15] Intervenor American Postal Workers Union AFL-CIO (“APWU” or “Union”) joins. Defendant Postal Service has submitted its Motion to Dismiss simultaneously with its [13] Opposition to Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction and relies on the same Memorandum of Points and Authorities to support both its Opposition and its Motion to Dismiss. Intervenor APWU similarly relies on the same arguments and authorities in support of its joinder in Defendant Postal Service's Motion to Dismiss as in its [11] Opposition to Plaintiff's Motion. Also before the Court is Plaintiff's [16] Reply in support of its Motion for Temporary Restraining Order and Preliminary Injunction. While captioned by Plaintiff solely as a “reply, ” the Court also considers it as Plaintiff's opposition to Defendant's Motion to Dismiss; Plaintiff addresses the jurisdictional and other substantive arguments that Defendant and Intervenor submit in support of their Motion to Dismiss, and the Court further notes that during the Status Hearing held by teleconference on December 5, 2016, the Court also raised jurisdictional questions and requested, in particular, that the parties address the justiciability questions of standing and ripeness in their briefing. The Court, in an exercise of its discretion, does not find it necessary to call for a reply from Defendant or Intervenor in further support of Defendant's Motion to Dismiss and deems both Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction and Defendant's Motion to Dismiss and Intervenor's joinder therein fully briefed and ripe for adjudication.

         Upon consideration of the pleadings, [2] the relevant legal authorities, and the record as a whole, the Court GRANTS Defendant's [14] and Intervenor's [15] Motion to Dismiss and DENIES Plaintiff's [6] Motion for Temporary Restraining Order and Preliminary Injunction. The Court finds that it lacks subject matter jurisdiction over this matter. First, Plaintiff lacks standing to bring these claims, which are not yet ripe for adjudication. Additionally, to the extent that these claims may be brought at some future time, jurisdiction is vested in the United States Court of Federal Claims. Lacking jurisdiction over the matter, the Court does not address Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction on the merits, as it lacks the authority to grant such relief.

         Accordingly, the Court shall DISMISS this action in its entirety as follows: Plaintiff's claims are hereby dismissed WITH PREJUDICE in this court for lack of subject matter jurisdiction under the Contract Disputes Act; on this record, Plaintiff's claims as to contracts held by contractors who are not members of Plaintiff Association are dismissed WITH PREJUDICE for lack of standing; Plaintiff's claims, however, are dismissed WITHOUT PREJUDICE, insofar as Plaintiff shall not be barred by this Order from seeking relief in the proper forum should Plaintiff be able to establish standing in the future if its claims become ripe for adjudication; and finally the Court shall DENY WITH PREJUDICE in this court Plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction, but Plaintiff shall not be barred by this Order from seeking such relief in the appropriate forum.

         I. BACKGROUND

         Because Plaintiff's claims arise out of the Postal Service's initial considerations of how it will implement the Arbitration Award, the Court shall only briefly set out the history that led up to the Arbitration Award. It is important, nonetheless, to begin with the general framework of the Postal Service's relationship with the two separate groups that provide mail transportation services, background facts upon which both parties agree.

         Throughout its history, the Postal Service has relied upon both private contractors and postal employees to fulfill its mission of delivering the mail. Routes serviced by private contractors are called Highway Contract Routes (“HCR”), and Plaintiff is an association that represents certain HCR contract holders. Corr. Compl. ¶¶ 4, 11. Routes serviced by postal employees are referred to as Postal Vehicle Service (“PVS”) routes. Corr. Compl. ¶ 12. The Postal Reorganization Act (“PRA” or “Act”) specifically provides for HCR contracts, authorizing the Postal Service to obtain mail transportation services “by contract from any person or carrier . . . under such terms and conditions as it deems appropriate.” 39 U.S.C. § 5005(a)(3). The Act further provides that such HCR contracts are to be awarded for a term no longer than four years (unless deemed “advisable or appropriate” by the Postal Service) and only “after advertising a sufficient time previously for proposals” to allow for a competitive bidding process. Id. at § 5005(b)(1). Furthermore, in determining whether to service a particular route by HCR or PVS, the Postal Service “shall use the mode of transportation which best serves the public interest, due consideration being given to the cost of the transportation service under each mode.” Id. at § 5005(c). The standard terms incorporated into HCR contracts, including those implicated in this matter, contain provisions that allow for termination for convenience or termination upon notice. See Corr. Compl. ¶ 25. See also USPS Opp'n at 3; Id. at Ex. 2, Att. A *17; Id. at Ex. 2, Att. B *28; Id. at Ex. 2, Att. E *30; Id. at Ex. 2, Att. F *27. On the record before the Court, no contracts addressed by the Arbitration Award require the Postal Service to provide cause before terminating an HCR contract. Rather, as long as the Postal Service provides the required notice, which the parties submit is typically a period of sixty days, it is permitted to exercise its bargained-for right under the contract to terminate an HCR contract without indemnification or penalty. See Pl. Mot. TRO & PI at 15; Pl. Reply at 14.

         Drivers on PVS routes are members of the American Postal Workers Union, Corr. Compl. ¶ 12, and their labor relationship with the Postal Service is governed by the Collective Bargaining Agreement, entered into by the Union and the Postal Service and referred to as the National Agreement. See Union Opp'n, Ex.1. The National Agreement includes provisions by which the Postal Service must abide-in addition to the statutory provisions of the Postal Reorganization Act-when determining whether to designate routes for service by HCR contracts or PVS. Article 32.2.A of the National Agreement echoes § 5005(c) of the Postal Reorganization Act and reads:

The American Postal Workers Union, AFL-CIO, and the United States Postal Service recognize the importance of service to the public and cost to the Postal Service in selecting the proper mode for the highway movement of mail. In selecting the means to provide such transportation the Postal Service will give due consideration to public interest, cost, efficiency, availability of equipment, and qualification of employees.

         Arbitration Award at *4. The National Agreement also stands to assure the Union an opportunity to participate in the bidding process before the Postal Service awards private contracts through its “Notice Requirements, ” set out in Article 32.2.B and C. See Arbitration Award at *4-5. Under these provisions, the Postal Service must provide the Union, at the National level, with at least sixty days' notice and specified information before renewing or installing a new HCR contract for any route; during that period, the Union has a guaranteed opportunity to submit a bid for the particular route and participate in a meeting with the Postal Service to discuss the route. Id. If the Union requests a meeting regarding a route that the Postal Service is considering contracting out for HCR service, the National Agreement unambiguously provides that “[a]t no time will the subject highway contract(s) for which a meeting has been requested be awarded prior to the actual meeting.” Id. at *5 (quoting National Agreement, Article 32.2.B).

         In 2011, the Union filed a grievance pursuant to the National Agreement, seeking adjudication of its claims of widespread violation of the Notice Requirements by the Postal Service. The arbitrator found-as alleged by the Union and not disputed by the Postal Service- that “during 2010 and in subsequent years, [the Postal Service] engaged in wholesale and repeated violations of its obligations not to award HCR contract[s]” before providing the Union with notice and an opportunity to submit a competing bid. Arbitration Award at *16. Nor did the Postal Service “offer[ ] an explanation for why it failed to comply with Article 32.2.B or to take effective corrective action even after the filing of this National grievance in 2011.” Id. at *16. Furthermore, the arbitrator found unpersuasive the Postal Service's argument that because it ultimately provided the Union with the notice and information required, albeit after the HCR contracts had been awarded, the Union was nonetheless given an adequate opportunity to submit bids for these routes. The arbitrator concluded, rather, that “discussion and review and consideration by the Postal Service of the factors in Article 32.2. A after a service contract has been let cannot be presumed to be equivalent to the procedure the National Agreement provides for and, critically, is not what the parties bargained for.” Id. at *17 (emphasis in original). The arbitrator further noted that the Postal Service's violation of its contractual obligations under the National Agreement “is not limited to the 212 cited violations[3] that occurred in 2010.” Id. at *19. Furthermore, the Postal Service's repeated and willful disregard of the Notice Requirements was not, in the arbitrator's view, mitigated by his finding that “there is little likelihood, as a general matter, that even if the Postal Service had provided timely notice and otherwise followed the procedures mandated by Article 32.2.B the Postal Service would have retrieved the HCR work at issue for performance by the bargaining unit rather than renewing the contracts.” Id. at *18.

         In the Arbitration Award, issued August 18, 2016, the arbitrator characterized the Postal Service's notice violation as “extraordinary, ” demonstrating “widespread and repeated disregard for the requirement of timely notice, ” and requiring a remedy “related to and proportional to the harm-as best it can be determined-to the Union and the bargaining unit.” Id. at *17-18. The arbitrator determined that a mere cease and desist order was indeed necessary, but alone, would be inadequate. Id. at *17. On the other hand, he determined that to award the Union the money damages that it sought would not be “appropriate or justified.” Id. at *19. Rather, the arbitrator imposed a multi-part award, beginning with imposing a cease and desist order “directing the Postal Service to comply with the notice and procedural provisions of Article 32.2.B before it awards an HCR contract.” Id. at *19, 20. The Award further orders that:

(1) Within six months of the date of this Award (unless otherwise agreed), the Postal Service shall convert 110 (or whatever number there continue to be) disputed routes remaining in service (out of the 212 cited violations) to PVS service for a four-year period.
(2) By agreement, the parties may substitute other route(s) to be converted to PVS service pursuant to this order based on particular circumstances.
(3) I retain jurisdiction to resolve any matters relating to implementation of this remedy.

Id. at *20. Two aspects of this remedy are of particular import to the Court's consideration of Plaintiff's claims and request that this Court enjoin the Postal Service from taking any action to implement it.

         First, the remedy is most appropriately understood as ordering rescission of the HCR contracts that were improperly awarded, and second, the remedy provides the Postal Service wide latitude in determining how best to comply with the order.[4] The Award affords to the Postal Service flexibility in determining what routes are best suited to conversion from HCR to PVS routes; it does not require that the 110 routes identified in the grievance that remained in service be converted, but rather required that that number of routes be converted to PVS routes.

         Furthermore, the parties may extend the deadline for conversion upon agreement, and may bring the matter back to the arbitrator for resolution of any issues, as necessary. This Award restores the Postal Service and the Union to status quo ante, affording the Union its bargained-for opportunity to bid for a route before an HCR contract has already been awarded. Rather than rigidly require that the particular HCR routes before the arbitrator be converted, the Award implicitly acknowledges that conversion of some or all of these routes might not be feasible or prudent and contemplates negotiation between the Postal Service and the Union in order to both redress the harms to the Union and allow for the efficient and appropriate transport of the mail. The flexibility of this award is critical. It affords the Postal Service an opportunity to examine its route assignments and design the proper combination of HCR and PVS routes that best serves the public interest. Rather than undertake this complex analysis, the Arbitration Award rather presumes that the Postal Service will comply with the requirements of § 5005 of the Postal Reorganization Act and the related provisions of the National Agreement.

         In the approximately four months that have elapsed since the issuance of the Arbitration Award, the Postal Service has taken no final actions to implement the award. The Postal Service chose not to seek to vacate the Arbitration Aw a r d . Pl. Mot. TRO & PI, Ex. 1, Att. F (“Marshall Letter”). The Postal Service provisionally identified 102 HCR routes under consideration for termination, a list of which it shared with Plaintiff. Pl. Mot. TRO & PI, Ex. 1, ¶15 (“Maraney Decl.”). Among the contracts provisionally identified, twenty-seven are held by members of Plaintiff Association. Id. ¶ 16. The Postal Service, however, has not finalized its determination of what HCR routes will be converted; rather, it “has determined that approximately half of the routes on the list may not [be] feasible to convert to PVS. The status of these routes and whether the routes will be substituted with others are currently under negotiation with the APWU.” USPS Opp'n, Ex 1, ¶ 11 (“Dean Decl.”). Whether members of Plaintiff Association hold the contracts for any of the routes still under consideration for termination cannot be ascertained from the record before the Court. Nor is the record developed as to the factors that the Postal Service is considering in assessing which contracts may be terminated, but it is presumed, and the Arbitration Award contemplates, that the Postal Reorganization Act's § 5005 considerations will be applied.

         In sum, as of this date negotiations between the Postal Service and the Union appear to be ongoing. It appears that no HCR contracts have yet been identified for certain termination, and the Postal Service has not sent any notices of termination to any HCR contractors (and, therefore, no members of Plaintiff Organization have received notice that their contracts will be terminated). Finally, as of this date, no HCR contracts have been terminated for the purposes of conversion to PVS service.

         II. LEGAL STANDARD

         When a motion to dismiss a complaint under Rule 12(b)(1) is filed, a federal court is required to ensure that it has “the ‘statutory or constitutional power to adjudicate [the] case[.]'” Morrow v. United States, 723 F.Supp.2d 71, 77 (D.D.C. 2010) (emphasis omitted) (quoting Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 89 (1998)). “Federal courts are courts of limited jurisdiction” and can adjudicate only those cases or controversies entrusted to them by the Constitution or an Act of Congress. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). “In an attempt to give meaning to Article III's case-or-controversy requirement, the courts have developed a series of principles termed ‘justiciability doctrines, '” including the doctrines of standing and ripeness.” Nat'l Treasury Emps. Union v. United States, 101 F.3d 1423, 1427 (D.C. Cir. 1996) (citing Allen v. Wright, 468 U.S. 737, 750 (1984)). The Court begins with the presumption that it does not have subject matter jurisdiction over a case, id., and Plaintiff bears the burden of establishing otherwise, Moms Against Mercury v. FDA, 483 F.3d 824, 828 (D.C. Cir. 2007). Furthermore, “Courts may ‘choose among threshold grounds for denying audience to a case on the merits.'” Fisher-Cal Indus., Inc. v. U.S., 747 F.3d 899, 903 (D.C. Cir. 2014) (quoting Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999)).

         In determining whether there is jurisdiction, the Court may “consider the complaint supplemented by undisputed facts evidenced in the record, or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.” Coal. for Underground Expansion v. Mineta, 333 F.3d 193, 198 (D.C. Cir. 2003) (internal citation and quotation marks omitted). “Although a court must accept as true all factual allegations contained in the complaint when reviewing a motion to dismiss pursuant to Rule 12(b)(1), ” the factual allegations in the complaint “will bear closer scrutiny in resolving a 12(b)(1) motion than in resolving a 12(b)(6) motion for failure to state a claim.” Wright v. Foreign Serv. Grievance Bd., 503 F.Supp.2d 163, 170 (D.D.C. 2007) (internal citation and quotation marks omitted).

         III. ...


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