Mb Financial Group v. US Postal Service

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MB FINANCIAL GROUP, INC., a 

Delaware Corporation doing

business as Union Affiliates

No. 06-56267

Mortgage Company,

Plaintiff-Appellant,

 D.C. No.

CV-06-00266-DMS

v.

OPINION

UNITED STATES POSTAL SERVICE;

UNITED STATES OF AMERICA,

Defendants-Appellees.



Appeal from the United States District Court

for the Southern District of California

Dana M. Sabraw, District Judge, Presiding

Argued and Submitted

March 4, 2008—Pasadena, California

Filed September 25, 2008

Before: Mary M. Schroeder, Kim McLane Wardlaw and

Richard C. Tallman, Circuit Judges.

Opinion by Judge Schroeder;

Dissent by Judge Tallman

13761

13764 MB FINANCIAL GROUP v. USPS

COUNSEL

Steven S. Kane, San Diego, California, for the plaintiff-

appellant.

Ray E. Donahue, Washington, D.C., for the defendants-

appellees.

OPINION

SCHROEDER, Circuit Judge:

This is an unusual case involving the potential liability of

the United States Postal Service (“USPS”) for failing to make

available a post office box it was obligated to provide for

receipt of plaintiff’s business mail. The district court dis-

missed the complaint pursuant to Federal Rule of Civil Proce-

dure 12 for lack of jurisdiction and failure to state a claim,

MB FINANCIAL GROUP v. USPS 13765

holding that the USPS was immune under the provision of the

Federal Tort Claims Act (“FTCA”) that exempts the USPS

from liability arising from negligently transmitted mail. See

28 U.S.C. § 2680(b).

We reverse. The complaint alleges a tort that does not nec-

essarily arise out of the negligent transmission of mail. The

complaint also alleges a facially viable breach of contract

claim. The dismissal of the action at this preliminary stage,

before any discovery could reveal either the USPS records of

the transaction or the true nature of the parties’ understanding,

was erroneous.

I. Background

MB Financial Group, Inc. (“MB Financial”) sells mail

order mortgage loans to members of labor unions in the San

Diego area. Its business depends on receiving mailed-in

responses to its solicitations. It rented a post office box in a

USPS branch office in San Diego and paid for six months of

usage. The USPS, admittedly through its own fault, did not

make the box available for the full six months. MB Financial

alleges that, as a result, it lost hundreds of thousands of dol-

lars worth of business.

MB Financial, according to its complaint, rented the box on

June 30, 2004, and paid fifty dollars as a six month rental fee.

Some time later that year, one of its representatives contacted

the USPS branch office to complain about not receiving mail.

In a letter dated January 3, 2005, which was attached to the

complaint, the USPS apologized and acknowledged that it

“may have been at fault” for the “premature closure of [the]

PO Box” due to “improper handling of fees.”

MB Financial filed this action against the USPS and the

United States in federal district court in April 2006, alleging

two claims for relief. The first was a negligence claim under

the FTCA, 28 U.S.C. § 2671 et seq., alleging that the USPS

13766 MB FINANCIAL GROUP v. USPS

negligently denied MB Financial use of the post office box for

which MB Financial had paid rental fees. The second was a

claim for breach of contract, alleging that the USPS failed to

credit MB Financial’s payment, and wrongfully failed to

make the box available for plaintiff’s use. The complaint

prayed for damages of $263,092.05, representing the alleged

profits lost as a result of MB Financial’s not receiving

responses to its direct mail solicitations of prospective cus-

tomers.

The defendants moved to dismiss the action and the district

court granted the motion. The district court held that

§ 2680(b) barred relief on the tort claim on the ground that it

was essentially a claim for negligent mail transmission. The

court said, quoting the complaint, that the essence of Plain-

tiff’s claim is that it did not receive its mailed-in responses to

its direct mail solicitations due to the defendants’ negligence.

The district court held that § 2680(b) barred relief on the

breach of contract claim as well because it was “based on the

same facts as [the] negligence claim.” As an alternative

ground, the district court held that the Postal Reorganization

Act of 1971 (“PRA”), 39 U.S.C. § 401(1), did not provide

subject matter jurisdiction over the contract claim. Specifi-

cally, the Act’s “sue and be sued” clause did not provide any

“substantive basis for a claim against the Postal Service.”

Because the district court dismissed the action on the plead-

ings, the parties never engaged in any discovery. This appeal

followed.

II. Statutory Background

Since its founding, the Postal Service has been reorganized

at various times. U.S. Postal Serv. v. Flamingo Indus. (USA)

Ltd., 540 U.S. 736, 739-40 (2004). In 1970 Congress passed

the PRA, which created the structure of the modern postal ser-

vice. Id. The PRA makes the USPS an “independent estab-

lishment of the executive branch of the Government of the

United States.” 39 U.S.C. § 201. As such, the USPS enjoys

MB FINANCIAL GROUP v. USPS 13767

sovereign immunity absent a waiver. Flamingo Indus., 540

U.S. at 744.

[1] Congress has provided for such a waiver. The PRA

waives the immunity of the USPS by giving it the power “to

sue and be sued in its official name.” 39 U.S.C. § 401(1); see

also Flamingo Indus., 540 U.S. at 741. The PRA also pro-

vides that the FTCA “shall apply to tort claims arising out of

the activities of the Postal Service.” 39 U.S.C. § 409(c). The

FTCA, in turn, provides a general waiver of sovereign immu-

nity subject to specific exceptions. The FTCA gives federal

courts exclusive jurisdiction to hear

civil actions on claims against the United States, for

money damages, accruing on and after January 1,

1945, for injury or loss of property, or personal

injury or death caused by the negligent or wrongful

act or omission of any employee of the Government

while acting within the scope of his office or

employment, under circumstances where the United

States, if a private person, would be liable to the

claimant in accordance with the law of the place

where the act or omission occurred.

28 U.S.C. § 1346(b)(1).

[2] The FTCA, in § 2680, qualifies this broad waiver by

retaining sovereign immunity for thirteen categories of

claims. One of those categories, described in § 2680(b), per-

tains to the operations of the USPS and is at issue in this suit.

Section 2680(b) provides that the waiver of sovereign immu-

nity in § 1346(b) “shall not apply to . . . [a]ny claim arising

out of the loss, miscarriage, or negligent transmission of let-

ters or postal matter.” The issue here is thus whether wrongful

failure to provide a box at the Post Office arises out of the

“negligent transmission” of the mail.

13768 MB FINANCIAL GROUP v. USPS

III. Analysis

A. The Tort Claim

The district court held that the USPS liability exception for

negligent mail transmission barred MB Financial’s tort claim.

MB Financial argues on appeal that § 2680(b) does not bar

recovery because its claim does not arise out of mail “trans-

mission,” but from failure to process properly the fee that

would make the P.O. box available. The Postal Service count-

ers that § 2680(b) does bar relief because the harm suffered

by MB Financial was the nondelivery of mail.

There is scant authority interpreting this exception. The

only Supreme Court case applying it is Dolan v. U.S. Postal

Service, 546 U.S. 481 (2006). Both sides argue that case con-

trols, although they differ as to the result it requires. No fed-

eral court of appeals has interpreted § 2680(b) in a published

opinion after Dolan.

In Dolan, the plaintiff sued the USPS for injuries she suf-

fered when she tripped and fell over mail parcels left on her

porch by postal employees. 546 U.S. at 483. The district court

and the court of appeals both concluded that the postal service

exception barred her claim, because the negligent placement

of the parcels was part of the transmission of mail. Id. at 483,

486. The Supreme Court reversed, id. at 492, construing the

exception more narrowly.

The Court explained that, “in isolation, the phrase ‘negli-

gent transmission’ [in § 2680(b)] could embrace a wide range

of negligent acts committed by the Postal Service in the

course of delivering mail, including creation of slip-and-fall

hazards from leaving packets and parcels on the porch of a

residence.” Id. at 486. Such a reading, however, would sweep

too far. The Court said, “context and precedent require a nar-

rower reading.” Id.

MB FINANCIAL GROUP v. USPS 13769

[3] As precedent, the Supreme Court looked to Kosak v.

United States, 465 U.S. 848 (1984), interpreting another

FTCA tort liability exception, involving claims for the deten-

tion of property by customs officials. In Kosak, the Supreme

Court had compared the customs service exception in

§ 2680(c) with the postal service exception in § 2680(b), con-

cluding that the postal exception was narrower and more spe-

cific. Dolan, 546 U.S. at 487 (citing Kosak, 465 U.S. at 855).

The Court in Kosak had looked to the history of the FTCA

and the problems Congress had tried to resolve with the stat-

ute, particularly with respect to post office drivers. The Kosak

Court had observed that “ ‘[o]ne of the principal purposes of

the Federal Tort Claims Act was to waive the Government’s

immunity from liability for injuries resulting from auto acci-

dents in which employees of the Postal System were at

fault.’ ” Id. at 487-88 (quoting Kosak, 465 U.S. at 855). In

light of this purpose, the Supreme Court said in Dolan that it

could not interpret the phrase “negligent transmission” in

§ 2680(b) as broadly as the USPS wished so as to cover all

negligent acts that occur in the course of mail delivery. Id. at

488. The Dolan court explained: “Although postal trucks may

well be delivering—and thus transmitting—mail when they

collide with other vehicles, Kosak indicates the United States,

nonetheless, retains no immunity.” Id. The negligence was in

truck driving, not in mail transmission, so there was no immu-

nity. On the basis of this analysis, the Supreme Court held

that §2680(b) did not bar the plaintiff’s claim that negligent

placement of mail at her home resulted in her personal inju-

ries. Id. at 492. Instead, her claim fell within the overarching

principle of the FTCA that the government should be liable

for the negligence of its employees in the same manner that

private entities would be liable in similar circumstances. See

id.

Dolan may also be read as distinguishing between the his-

torically governmental service of carrying the United States

mail and the performance of acts that may be related to deliv-

ery, but constitute more ordinary activities that private actors

13770 MB FINANCIAL GROUP v. USPS

engage in as well. Hence, negligent driving of postal trucks

was a principle activity for which Congress wanted to create

liability when the FTCA waived sovereign immunity. The

FTCA made the USPS liable for negligence of its drivers in

the same manner that state law makes private employers lia-

ble for the negligence of their truck driver employees. See

Restatement (Third) of Agency § 2.04. Construing the excep-

tion broadly, so as to cover delivery as well as transmission

of the mail, would have immunized the negligence of drivers

and frustrated the legislative purpose of the FTCA. The

exception would have swallowed the rule.

[4] The Supreme Court in Dolan quoted with approval an

earlier decision of the Second Circuit in Raila v. United

States, 355 F.3d 118 (2d Cir. 2004). See Dolan, 546 U.S. at

486. The Second Circuit had held that the Postal Service

exception of § 2680(b) did not immunize the government

from liability for a slip-and-fall caused by mail negligently

left at the plaintiff’s residence. Id. at 119. The court had

observed that it was interpreting the postal service exception

more narrowly than the language of the exception might sug-

gest. Id. at 119, 120-21. As the Second Circuit had explained,

the phrase “negligent transmission” in § 2680(b) could be

read to encompass every negligent action taken by a postal

worker “[b]ecause a postal worker’s every step is, on some

level, taken as part of the transmission of letters and postal

matter—that being the business of the USPS.” Id. at 120

(internal alterations and quotation marks omitted). The court

of appeals rejected this reading, concluding that Congress

intended the language to be interpreted more narrowly. Id.

The Supreme Court approved this analysis. See Dolan, 546

U.S. at 486.

[5] The Court in Dolan also approved the Second Circuit’s

reasoning that focused on whether the plaintiff could insure

against the harm of which she complained. See id. at 490. The

Second Circuit had stated in Raila that “where the nature of

the injury was such that an injured party [cannot] protect him-

MB FINANCIAL GROUP v. USPS 13771

self or herself by registering the parcel, the postal matter

exception [does] not apply.” 355 F.3d at 122. The Second Cir-

cuit had explained that it is easier and more efficient to

encourage the purchase of insurance, rather than encourage

litigation to protect against the unavoidable mishaps that are

incident to the USPS’ ordinary function of mail delivery. Id.

However, where insurance was available to compensate the

plaintiff for her loss, the Postal Service exception was not

available to the USPS as a shield. Id. The sender’s registration

of the packages could not have compensated for the plaintiff’s

tripping over them.

[6] In this case, the alleged negligence was not in transmit-

ting the mail to the proper place of delivery. Rather, it was in

the admittedly improper handling of MB Financial’s payment

for its post office box, due to the failure to process the

renewal. The negligence occurred after the mail was transmit-

ted to the Post Office, and in this sense is similar to the negli-

gence of the postal delivery employees in Dolan who did not

put the boxes in an appropriate place after they had been

delivered to the right address. The policy of the FTCA sup-

ports the principle that the USPS should be liable on the same

basis that a private provider of mail box services would be lia-

ble under state law for failing to exercise reasonable care to

see that the box remained open to receive responses to MB

Financial’s solicitations.

Furthermore, like Dolan and Raila, the plaintiff’s losses are

not compensable through insurance. Cf. Dolan, 546 U.S. at

490 (“[L]osses of the type for which immunity is retained

under § 2680(b) are at least to some degree avoidable or com-

pensable through postal registration and insurance.”). The

USPS conceded that MB Financial could not have purchased

insurance to protect itself against the harm of which it com-

plains. The complaint alleged that, as a result of negligence in

record keeping, the plaintiff did not receive responses to its

direct mail solicitations.

13772 MB FINANCIAL GROUP v. USPS

[7] We stress that in holding the complaint states a claim

for which the Postal Service is not immune, we are not hold-

ing that it is liable. The actual conduct of the postal employ-

ees is not yet known, beyond the admissions in the USPS’s

apology, which was attached in the complaint, for “delay or

loss of mail due to improper handling of fees.” Because this

was a dismissal on the pleadings, however, we do not know

the contours of the obligation or the duty the defendants owed

the plaintiff. For example, we do not know if the plaintiff

acknowledged any limitations on the liability of the post

office. We do not know what, if any, representations were

made to the plaintiff regarding the availability of the box and

the duration of its access. We hold only that the allegations of

the complaint indicate that the negligence did not arise out of

the transmission of the mail within the meaning of § 2680(b),

as construed in Dolan.

B. The Contract Claim

[8] With respect to the contract claim, the district court held

that because it was based on the same facts as the tort claim,

the contract claim was also barred by § 2680(b). Since we

hold that the tort claim is not barred by § 2680(b), the contract

claim is also not barred.

The district court correctly noted that a plaintiff is generally

entitled to plead alternative or multiple theories of recovery

on the basis of the same conduct on the part of the defendant.

See Fed. R. Civ. P. 8(d)(2) (“A party may set out [two] or

more statements of a claim or defense alternatively or hypo-

thetically, either in a single count or defense or in separate

ones.”); Ajax Hardware Mfg. Corp. v. Indus. Plants Corp.,

569 F.2d 181, 185 (2d Cir. 1977) (“Negligent performance of

a contract may give rise to a claim sounding in tort as well as

one for breach of contract.”)

The claims in this case arise out of the same situation but

do not necessarily rest on the same facts. The tort claim seeks

MB FINANCIAL GROUP v. USPS 13773

damages that resulted from the USPS’s alleged negligent

record keeping that closed the box to MB Financial’s mail.

The contract claim alleges that the post office breached an

express agreement to provide a six-month rental of a post

office box in exchange for MB Financial’s payment of the

fee. Again, because the case was dismissed at the pleading

stage we do not know the precise contours of that agreement.

[9] The district court correctly recognized that the “sue and

be sued” provision of the PRA does not create a cause of

action against the USPS. It is merely waiver of sovereign

immunity. See Flamingo, 540 U.S. at 743-44. Here, the tort

claim is asserted pursuant to the FTCA as it has been incorpo-

rated in the PRA. The contract claim rests on the alleged con-

tractual agreement of the parties and common law principles

of contract law. See Herin v. U.S. Postal Serv., 116 F.3d 988,

990-91 (2nd Cir. 1997). A substantive law foundation thus

exists for both of MB Financial’s claims as alleged in the

complaint.

REVERSED.

TALLMAN, Circuit Judge, dissenting in part:

The majority today circumvents express congressional

intent to immunize the Postal Service from liability arising

out of consequential damages claims for failure to deliver

mail after M.B. Financial’s (M.B.) post office box was closed

prematurely following M.B.’s submission of a check to renew

the rental period. I respectfully dissent from part III A of the

majority’s opinion. I otherwise concur in the result the major-

ity reaches.

13774 MB FINANCIAL GROUP v. USPS

I

A

As a society, we have entered into a social contract with the

federal government. We pay taxes and receive certain services

in return, some of which would never be provided unless the

government steps in to correct what economists term a “mar-

ket failure.” See U.S. Postal Serv. v. Council of Greenburgh

Civic Assoc., 453 U.S. 114, 121 (1981) (explaining that “[t]he

Post Office played a vital yet largely unappreciated role in the

development of our new nation”). At bottom, market failure

occurs when there is no incentive for private businesses to

provide a service. Historically, the provision of national and

international mail services at affordable prices has been

among the market failures the government has rectified. See

id. (noting that “[b]y the early eighteenth century, the posts

were made a sovereign function in almost all nations because

they were considered a sovereign necessity”). Creating what

is now called the United States Postal Service was the Ameri-

can answer. See id.

To be sure, in modern times, private players have partially

entered the market. Consistent with rational economic incen-

tives to seek the highest returns, these private companies have

cornered the express post market niche. They do not, how-

ever, deliver letters at the current first class rate of 42 cents

anywhere in the country. Typically, private companies pro-

vide rush service at much higher rates and do not possess the

infrastructure nor economic incentive to deliver mail on the

same scale as the Postal Service. Tellingly, they limit by con-

tract of carriage their liability to a modest fixed amount.

The Postal Service provides cheap rates because “it does

not seek profits, but only to break even.” U.S. Postal Serv.

Inc. v. Flamingo Indus. (USA) Ltd., 540 U.S. 736, 747 (2004).

We benefit from these discounted rates at a cost. In exchange

for universal mail delivery at artificially low but affordable

MB FINANCIAL GROUP v. USPS 13775

prices, which the market left to its own devices has no incen-

tive to provide, we may not sue the Postal Service for dam-

ages if our mail is not delivered. See 28 U.S.C. § 2680(b).1 Of

course, those seeking greater protection, such as a guarantee

that overnight mail will be delivered, may pay the premiums

that private companies charge. The Postal Service itself offers

for additional payment insurance and a guarantee that mail

will be delivered.

The Postal Service has grown and become a competitive

business in its own right. See Council of Greenburgh, 453

U.S. at 122 (stating that “[t]he Postal Service today is among

the largest employers in the world”). Immunity from all types

of law suits, Congress has recognized, is no longer appropri-

ate. See 39 U.S.C. § 401(1). For example, the Postal Service

is not immunized when, while driving in the course of deliv-

ering mail, a postal employee negligently operates a postal

vehicle resulting in personal injury to another driver. See, e.g.,

Kosak v. United States, 465 U.S. 848 (1984). At the same

time, Congress has left undisturbed immunity for the Postal

Service’s core function — the delivery of mail. See 28 U.S.C.

§ 2680(b). The majority distorts these carefully drawn lines

and now exposes the Postal Service to liability where Con-

gress intends none.

B

This is at heart a simple claim that the Postal Service failed

to deliver commercial mail. The mail did not reach the postal

patron because the postmaster prematurely closed the rented

post office box following M.B.’s attempts to renew the rental

term.

1

Title 28, section 2680(b) of the United States Code provides that the

Federal Tort Claims Act’s waiver of immunity found in 28 U.S.C.

§ 1346(b) “shall not apply to . . . [a]ny claim arising out of the loss, mis-

carriage, or negligent transmission of letter or postal matter.”

13776 MB FINANCIAL GROUP v. USPS

M.B. Financial Group, Inc. had rented a post office box for

an additional six-month term from a San Diego, California

branch station of the U.S. Postal Service. It paid some fifty

dollars monthly for the privilege. M.B. hoped to receive

responses (and profit) from its direct mail solicitations entic-

ing members of local unions to apply for and secure mortgage

loans it offered.

No one disputes that the Postal Service botched the pro-

cessing of the renewal rental payment and M.B. did not

receive the extension of its lease. The post office box was

closed too soon; M.B. did not receive all of its mail. No mat-

ter the legal characterization, however, M.B. wants as conse-

quential damages the money it thinks it would have realized

had it actually received the responses from mortgage-seeking

union members, issued mortgages to qualified borrowers, and

earned commissions, fees, and interest from the loans. It esti-

mates the loss to be millions of dollars.

Although the facts, if proven, may well state a viable claim

for breach of the post office box rental agreement, there can

be no viable cause of action for millions of dollars in conse-

quential damages as a result of the postmaster’s negligence.

It would be astounding to learn that Congress intended other-

wise when it enacted § 2680(b).

II

The majority correctly describes the statutory scheme codi-

fying the basic principles discussed above. The analytic start-

ing point is that, as an “independent establishment of the

executive branch of the Government of the United States,” the

U.S. Postal Service is protected from suit by the doctrine of

sovereign immunity unless Congress has specifically waived

immunity. 39 U.S.C. § 201; Flamingo Indus., 540 U.S. at 740.

And there can be no dispute that Congress has waived cer-

tain aspects of the Postal Service’s immunity from suit. The

MB FINANCIAL GROUP v. USPS 13777

Postal Reorganization Act of 1971, 39 U.S.C. § 401(1), recog-

nized that the Postal Service could “sue and be sued in its

official name.” See also Flamingo, 540 U.S. at 741. Indeed,

Congress provided, the waiver of sovereign immunity codi-

fied in the Federal Tort Claims Act “shall apply to tort claims

arising out of the activities of the Postal Service.” 39 U.S.C.

§ 409(c). Nevertheless, Congress was unwilling to extend lia-

bility to “any claim arising out of the loss, miscarriage, or

negligent transmission of letters or postal matter.” 28 U.S.C.

§ 2680(b). That is what happened here. Nonetheless, my col-

leagues misread the scope of this bar to revive M.B.’s suit.

III

The majority’s reading of Dolan v. U.S. Postal Serv., 546

U.S. 481 (2006), the one case in which the Supreme Court has

interpreted the contours of the negligent transmission excep-

tion, goes too far. In that case, the plaintiff tripped and fell

over packages that a Postal Service employee placed on her

porch. The Supreme Court explained that “in isolation, the

phrase ‘negligent transmission’ could embrace a wide range

of negligent acts committed by the Postal Service in the

course of delivering mail, including creation of slip-and-fall

hazards from leaving packets and parcels on the porch of a

residence.” Dolan, 546 U.S. at 486. After reviewing both

“context and precedent,” the Court was persuaded that “a nar-

rower reading [of the bar to suit]” was required; one that

would permit the type of slip-and-fall claim that Dolan urged.

Id.

In reaching this conclusion, as the majority correctly notes,

the Court drew on its decision in Kosak v. United States, 465

U.S. 848 (1984). In that case, the Court observed that “ ‘[o]ne

of the principal purposes of the Federal Tort Claims Act was

to waive the Government’s immunity for liability for injuries

that arise from auto accidents in which employees of the

Postal System were at fault.’ ” Dolan, 546 U.S. at 487-88

(quoting Kosak, 465 U.S. at 855). This stated purpose led the

13778 MB FINANCIAL GROUP v. USPS

Court in Dolan to reject a broad reading of the bar to suit, rea-

soning that “[a]lthough postal trucks may well be delivering

—and thus transmitting—mail when they collide with other

vehicles, Kosak indicated the United States, nonetheless,

retains no immunity.” Id. at 488. Understandably, Dolan’s

claim was not barred.

We confront a very different factual situation that does not

easily lend itself to analogy with automobile accidents result-

ing from postal employee tortious negligence or slip and falls

resulting from negligent placement of postal articles. Indeed,

Dolan itself recognized situations, similar to this one, in

which the Postal Service would retain immunity:

We think it more likely that Congress intended to

retain immunity, as a general rule, only for injuries

arising, directly or consequentially, because mail

either fails to arrive at all or arrives late, in damaged

condition, or at the wrong address. Illustrative

instances of the exception’s operation, then, would

be personal or financial harms arising from nonde-

livery or late delivery of sensitive materials or infor-

mation ( e.g., medicines or a mortgage foreclosure

notice) or from negligent handling of a mailed par-

cel ( e.g., shattering of shipped china). Such harms,

after all, are the sort primarily identified with the

Postal Service’s function of transporting mail

throughout the United States.

Id. at 489 (emphasis added).

The financial harm suffered by M.B. arose from non-

delivery of its mail. Stated another way, the damages that

M.B. seeks arise “consequentially, because mail either fail[ed]

to arrive at all or arrive[d] late, in damaged condition, or at

MB FINANCIAL GROUP v. USPS 13779

the wrong address.” For this occurrence, Congress has not

waived sovereign immunity. See 28 U.S.C. § 2680(b).2

The majority insists that we make this case more compli-

cated than it is. It reads Dolan “as distinguishing between the

historically governmental service of carrying the United

States mail and the performance of acts that may be related

to delivery, but constitute more ordinary activities that private

actors engage in as well.” Op. at 13769-70. This observation

may be correct as far as it goes. But it is the majority’s appli-

cation that fails to persuade. The majority concludes that “the

alleged negligence was not in transmitting the mail to the

proper place of delivery. Rather, it was in the admittedly

improper handling of MB Financial’s payment for its post

office box, due to the failure to process the renewal. The neg-

ligence occurred after the mail was transmitted to the Post

Office, and in this case is similar to the negligence of the

postal delivery employees in Dolan who did not put the boxes

in an appropriate place after they had been delivered to the

right address.” Op. at 13771. That the complaint pleads a

cause of action for negligence based on allegations that the $

50 rental renewal fee was improperly processed does not

speak to the nature of the damages sought. The damages arise

in this case solely because the mail failed to reach its destina-

tion point, and for that occurrence the Postal Service is

2

The majority laments my reading of Dolan as incomplete because, my

colleagues argue, Dolan further stands for the proposition that “losses of

the type for which immunity is retained under § 2680(b) are at least to

some degree compensable through postal registration and insurance.” 460

U.S. at 490. I am unpersuaded that this statement, or the fact that the par-

ties appear to agree that no insurance was available, changes the outcome.

Insurance for the early closing of a post office box may not be available,

but that is not the risk for which M.B. now seeks indemnification. It

wanted its mail to arrive, mortgages to be placed through its offices, and

to thereby derive financial benefit from its direct mail solicitations. There

were a number of ways M.B. could have structured its business transac-

tions to protect itself from this risk. For example, rather than look to the

Postal Service, M.B. could have purchased business loss insurance.

13780 MB FINANCIAL GROUP v. USPS

immune. We were reversed in Flamingo Industries (USA) Ltd.

v. U.S. Postal Service because we thought the Postal Service

would face similar antitrust liability to that of its competitors

when Congress said the corporation could “sue and be sued”

as if it were a private entity rather than part of the govern-

ment. 302 F.3d 985 (9th Cir. 2002), rev’d, 540 U.S. at 744.

We were wrong then. We are wrong now.

The majority’s rule would have us engage in a type of

highly particularized and complicated temporal debate about

when transmission ends and delivery-related activity begins—

the former protected by sovereign immunity and the latter not.

The majority’s reading of Dolan, by way of example, would

have to mean that transmission ended at the porch steps. That

interpretation could have force if the postal employees, say,

took a break at the porch and then continued on to place the

mail on the porch. Yet, what would be the result if the postal

employees walked, without pause, from the Jeep onto the

porch, placing the parcels along the sidewalk leading up to the

porch? Would the Postal Service escape liability because the

mail was still in transit?

There is, in my view, no way to reach a reasoned result

under such an analogy. Neither Dolan nor the statutory

scheme compel the result the majority reaches, and a more

workable solution is apparent from the case law. The common

thread among the cases is that where the damages that flow

from the alleged negligence are injuries distinct from non-

delivery, late delivery, or loss of mail, the exception to immu-

nity does not apply. In Dolan, the damages sought surely

sounded in pain and suffering and had nothing to do with the

mail other than it was placed in a negligent manner and cre-

ated a trip-and-fall hazard that proximately caused the pain

and suffering. Similarly, in the illustrative situation described

in Kosak, the damages from the auto accident were unrelated

to the mail; they too were pain and suffering and other atten-

dant tort damages.

MB FINANCIAL GROUP v. USPS 13781

The commercial damages M.B. wants here, no matter how

liberally we construe the complaint, are the value of the mort-

gage business lost when the mail was not placed in its rented

mailbox. In other words, M.B. prays for damages consisting

of “financial harms arising from nondelivery or late delivery

of sensitive materials or information.” Dolan, 546 U.S. at 489.

Recovery on those grounds, no matter how artfully the plain-

tiff might choose to plead the alleged negligence claim, is

foreclosed because “[s]uch harms, after all, are the sort pri-

marily identified with the Postal Service’s function of trans-

porting mail throughout the United States.” Id. Congress has

not waived its sovereign immunity for this kind of action. 28

U.S.C. § 2680(b).

IV

Because the majority would allow recovery of enormous

consequential commercial damages for what amounts to a

simple claim of failure to deliver mail, I respectfully dissent

from part III A of the opinion. Although M.B. states no color-

able claim with respect to its negligence claim, I agree that

M.B. may recover under a state law breach of contract theory

for premature loss of its post office box. Damages would be

limited to a refund of the fee to renew the post office box.