# Combined Communications Corporation Nashville Banner Publishing Company, Cross-Appellees v. United States Postal Service, Cross-Appellant

> Court of Appeals for the Sixth Circuit · December 15, 1989 · 891 F.2d 1221

URL: https://www.frixlaw.com/law-library/cases/9479802

## Case

- **Full name:** COMBINED COMMUNICATIONS CORPORATION; Nashville Banner Publishing Company, Plaintiffs-Appellants Cross-Appellees, v. UNITED STATES POSTAL SERVICE, Defendant-Appellee Cross-Appellant
- **Court:** Court of Appeals for the Sixth Circuit
- **Decided:** December 15, 1989
- **Citations:** 891 F.2d 1221; 1989 U.S. App. LEXIS 19002
- **Precedential status:** Published
- **Opinion:** Dissent by Krupansky
- **Judges:** Krupansky, Martin, Milburn
- **Cited by:** 3 later opinions in the Frix Law Library

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## Opinion text

KRUPANSKY, Circuit Judge,
dissenting.
This action was properly initiated before the Postal Rate Commission (Commission) by the Combined Communication Corp. and the Nashville Banner Publishing Co. (plaintiffs), as aggrieved parties, pursuant to the Congressional mandate expressed in 39 U.S.C. § 3662 of the Postal Reorganization Act of 1970 1 (the Act), by filing a complaint wherein they asserted that the Postal Service (Service) was charging them rates which did not conform to the policies set out in the Act and that they were not receiving postal service in accordance with its policies, as a result of which, their “Plus” publications were denied a second class mail and rate classification as authorized by § 200.0123 of the Domestic Mail Classification Schedule (DMCS). As a result of the Service’s alleged illegal acts, the plaintiffs sought an injunction requiring the Service to move “Plus” publications at second class rates and a refund of the postage improperly collected by the Service, being the difference between second and third class postage.
Pursuant to § 3662 of the Act, the Commission conducted hearings to consider and determine if plaintiffs’ “Plus” publications qualified for second class mail and rate privileges under duly promulgated and effective § 200.0123 of the DMCS and to further determine if the Service was illegally denying them those privileges by the enforcement of an alleged invalid rule of its Domestic Mail Manual (DMM) 2 § 425.226. The Commission issued a decision wherein it ordered that:
the right forum for determining the validity of a Postal Service rule, purportedly issued under its independent adminis *1233 trative powers, would be a United States District Court, National Retired Teachers Association v. USPS, 430 F.Supp. 141 (D.D.C.1977), aff'd, 193 U.S.App.D.C. 206 , 593 F.2d 1360 (1979). 3
Without exhausting their available administrative remedies by petitioning the Board of Governors (Governors) to review the Commission’s order and thereafter appealing directly to this court pursuant to the requirements of § 3628 of the Act, if warranted, the plaintiffs immediately abandoned their complaint before the Commission and commenced this action before the district court asserting the same charges that they had advanced before the Commission.
The trial court improvidently exercised plenary jurisdiction over the plaintiffs’ case and resolved the substantive issues of the controversy with the following decision:
For the reasons set forth above, the Court grants plaintiffs’ motion for summary judgment in part and orders that judgment be entered in plaintiffs’ favor for:
1. A declaration that DMM § 425.226 is unlawful to the extent that it modifies the existing DMCS; and
2. An injunction requiring the USPS to carry The Sunday Tennessean FOCUS and The Nashville Banner NEIGHBORHOOD at second-class rates in accordance with DMCS § 200.0123.
Plaintiffs’ request for a postage refund, however, is hereby denied.
Combined Communications Corp. v. U.S. Postal Service, 686 F.Supp. 663 (M.D.Tenn.1988).
The trial court’s disposition, as affirmed by the panel majority, apart from presenting an intracircuit precedential conflict, encourages litigants to forego the exhaustion of available administrative remedies in lieu of district court jurisdiction to adjudicate mail schedule and rate claims despite the express prohibition of 39 U.S.C. §§ 409 and 3628, merely by challenging the validity of a DMM rule which the Service has enacted and relied upon in denying mail and rate classifications to which claimants have asserted entitlement. The instant case demonstrates how litigants, who challenge mail classifications and rate schedules which are in discord with “the policies set out in this title or who believe they are not receiving postal services in accordance with the policies of this title,” may elect not to pursue available administrative remedies by artfully pleading the invalidity of a Service rule. “It would require the suspension of disbelief to ascribe to Congress the design to allow its careful and thorough remedial scheme to be circumvented by artful pleading.” Block v. North Dakota, 461 U.S. 273, 285 , 103 S.Ct. 1811, 1818 , 75 L.Ed.2d 840 (1983) (quoting Brown v. GSA, 425 U.S. 820, 833 , 96 S.Ct. 1961, 1968 , 48 L.Ed.2d 402 (1976)).
The futility of the expended judicial effort and resource accorded to this case becomes apparent with the obvious realization that the issues joined and resolved by the district court were identical to those joined before the Commission which could and should have been resolved by the administrative and judicial procedure mandated by the Act.
In sum, subchapter II of the Postal Reorganization Act of 1970 presents an unusual example of Congressional lucidity in drafting comprehensive legislation that provides for an orderly and effective administrative and judicial procedure to expeditiously entertain, process, consider, adjudicate, and dispose of citizen complaints challenging Service imposed mail and rate classifica *1234 tions and/or postal service conferred by the Act. The legislation has effectively accorded the public procedural due process, has confined mail classification and rate-making regulations within the Service, where those procedures rightfully belong, and it has efficiently conserved the judicial resource by thoughful jurisdictional limitations calculated to protect the courts from the burden of resolving every challenge to the mail and rate schedules adopted by the service. The clarity of the legislation leaves no room for interpretation.
The only ambiguity arising from sub-chapter II of - the Act results from the confusion prompted by the Commission’s obfuscated reasoning in directing the plaintiffs to invoke the plenary jurisdiction of the district court, the abandonment of the plaintiffs’ complaint initiated pursuant to § 3662 without exhausting their administrative remedies, and the improvident and improper exercise of plenary jurisdiction by the trial court over a controversy expressly beyond its authority which action is now endorsed by the panel majority’s disposition of this appeal.
The bright line demarcation between administrative and original judicial jurisdiction which has heretofore existed is obscured, if not completely obliterated, by the majority’s effort to distinguish the instant case from the pronouncements of this circuit in The Enterprise, Inc. v. Bolger, 774 F.2d 159 (6th Cir.1985) (hereinafter referred to for convenience as “Enterprise I”), and by its attempt to create a fictional precedential interrelationship between it and The Enterprise, Inc. v. United States, 833 E-2d 1216 (6th Cir.1987) (hereinafter referred to for convenience as “Enterprise II”), decided two years after Enterprise I. Enterprise I is the only case that addresses the jurisdictional issues of the instant case.
Initially, it should be noted that this circuit has viewed, with disapproval, the majority’s premise that “[w]e have reviewed this case under the general grant of jurisdiction which Congress gave to federal courts under 28 U.S.C. § 1339 and 39 U.S.C. § 409 (a)[; w]e have not reviewed this case under the grant of appellate review provided in 39 U.S.C. § 3628 .” In addressing this issue in Enterprise I, this circuit observed that “we are not unaware of the plaintiff’s assertion that jurisdiction is vested in the district court by 39 U.S.C. § 409 , but we note that § 409 specifically exempts cases covered by § 3628 from its coverage.” The Enterprise, Inc., 774 F.2d at 161 . Moreover, the jurisdictional provisions of 39 U.S.C. §§ 401 , 409 and 28 U.S.C. §§ 1331 and 1339 merely provide for a waiver of otherwise applicable sovereign immunity and confer subject matter jurisdiction upon district courts in certain circumstances outside the orbit of mail schedule and rate classification controversies. A jurisdictional statute does not itself provide a cause of action of a substantive basis for relief. Phillips Petroleum v. Texaco, Inc., 415 U.S. 125 , 94 S.Ct. 1002 , 39 L.Ed.2d 209 (1974). Judicial review by a district court of a Postal Service rule, as a substitute for the administrative remedy and judicial review provisions mandated by Congress, is foreclosed by 39 U.S.C. §§ 3662 and 3628. Even in the absence of an expressed statutory comment of exclusiveness, the statutory mode must be followed where Congress has enacted a specific statutory scheme of review. Whitney National Bank v. New Orleans Savings & Trust Company, 379 U.S. 411 , 85 S.Ct. 551 , 13 L.Ed.2d 386 (1965).
Enterprise I is factually indistinguishable from and dispositive of the instant action. Both cases charged the Service with denying a second class mail and rate classification for predominantly advertising oriented mail to nonsubscribers by enforcing invalid rules of its Domestic Mail Manual. In the case of Enterprise I, an unconstitutional rule; in the instant case, an invalid rule resulting from usurping the authority reserved for the Commission and the Governors. In both Enterprise I and the instant case, the aggrieved parties failed to exhaust their administrative remedies mandated by the Act. In the ease of Enterprise I, the publishers completely ignored the mandate of the Act by improperly invoking the plenary jurisdiction of the district court. In the instant case, the *1235 plaintiffs, after initially filing a complaint with the Commission, abandoned it without petitioning the Governors to review the Commission’s order and without appealing the Governors’ adverse disposition directly to this court. In both cases, the Service moved to dismiss the appeal from the district court’s decision asserting its lack of plenary jurisdiction. This court confronted the jurisdictional issue in Enterprise I and concluded that:
Upon consideration, the court is of the opinion that the Postal Service is correct in its contention that review of a mail rate or classification decision such as that involved here may be sought only on review in the United States Court of Appeals and not by plenary action in the district court. 39 U.S.C. § 3628 .
The legislative history of the Postal Reorganization Act, 39 U.S.C. §§ 101-5605 , plainly supports this view, and the House Report on the Act further indicates a Congressional intent that even constitutional questions such as those asserted here should be raised initially at the agency level followed by review of the agency’s classification decision in the courts of appeal. See H.R.Rep. No. 1104, 91st Cong., 2d Sess., reprinted in 1970 U.S. Code Cong. & Ad. News 3649, 3695 (“[Jjudicial review ... is confined to constitutional, statutory and procedural questions which were raised before the [Postal] Authority”).... The specific reference to constitutional questions in the House Report shows that Congress intended even those issues to be raised before the agency. See also Reader’s Digest Association v. United States Postal Service, 501 F.Supp. 126, 128-29 (D.D.C.1980), appeal dismissed as moot, Dow Jones & Co. v. United States Postal Service [ 211 U.S.App.D.C. 197 ], 656 F.2d 786 (D.C.Cir.1981), wherein the district court in dismissing the publisher’s action recognized that section 3628 “explicitly says that review of Governor’s decision on rate matters lies in the Court of Appeals [and that deciding the case before it] would draw the Court into territory reserved exclusively to the Court of Appeals”; and United Parcel Service, Inc. v. United States Postal Service, 524 F.Supp. 1235 (D.Del.1981).
In ruling that the district court was without jurisdiction, we find it unnecessary to pass upon the merits of the other grounds raised as bases for reversal.
Accordingly, the judgment of the district court is VACATED and the cause REMANDED to the district court with instructions to dismiss the complaint.
The Enterprise, Inc. v. Bolger, 774 F.2d 159, 161-62 (6th Cir.1985), see also Shelby Resources, Inc. v. United States Postal Service, 619 F.Supp. 1546, 1549 (S.D.N.Y.1985) (“[T]he sole remedy for a user of postal service who is not receiving adequate service or service equal to that furnished to others” is to file a complaint, pursuant to 39 U.S.C. § 3662 , with the Postal Rate Commission).
The clarity of this circuit’s pronouncements in Enterprise I, like the clarity of subchapter II of the Act, leaves no room for interpretation. Moreover, the panel majority’s effort to interrelate the decisions of Enterprise I with Enterprise II is unpersuasive. Enterprise II was decided two years after this circuit dismissed Enterprise I for failure to exhaust available administrative procedures mandated by the Act. This circuit entertained the appeal in Enterprise II only after the publisher implemented the mandated requirements of the Act with the filing of a complaint before the Commission, petitioning the Governors for review of the Commission’s order and thereafter appealing from that adverse decision to this court. The only significance of Enterprise II to the instant case is that it demonstrates the complete and total effectiveness of the administrative procedures and appellate review incorporated into the Act.
For the foregoing reasons I respectfully dissent from the panel majority’s disposi-. tion for the reasons enunciated by this circuit in Enterprise I and the reasons stated herein and would accordingly vacate the decision of the district court and re *1236 mand the case with instructions to dismiss the complaint.
In ruling that the district court is without jurisdiction, I find it unnecessary to pass upon the merits of the other issues confronting this appeal.
. Title 39 U.S.C. § 3662 provides, in pertinent part, as follows:
Interested parties who believe the Postal Service is charging rates which do not conform to the policies set out in this title or who believe that they are not receiving postal service in accordance with the policies of this title may lodge a complaint with the Postal Rate Commission in such form and in such manner as it may prescribe. The Commission may in its discretion hold hearings on such complaint. If the Commission, in a matter covered by subchapter II of this chapter, determines the complaint to be justified, it shall, after proceedings in conformity with section 3624 of this title, issue a recommended decision which shall be acted upon in accordance with the provisions of section 3625 of this title [by the Governors] and subject to review in accordance with the provisions of section 3628 of this title [direct appeal to any court of appeals in the United States], (emphasis added).
Title 39 U.S.C. § 3628 provides that:
A decision of the Governors to approve, allow under protest, or modify the recommended decision of the Postal Rate Commission may be appealed to any court of appeals of the United States, within 15 days after its publication by the Public Printer, by an aggrieved party who appeared in the proceedings under section 3624(a) of this title. The court shall review the decision, in accordance with section 706 of title 5, and chapter 158 and section 2112 of title 28, except as otherwise provided in this section, on the basis of the record before the Commission and the Governors. The court may affirm the decision or order that the entire matter be returned for further consideration, but the court may not modify the decision. The court shall make the matter a preferred cause and shall expedite judgment in every way. The court may not suspend the effectiveness of the changes, or otherwise prevent them from taking effect until final disposition of the suit by the court. No court shall have jurisdiction to review a decision made by the Commission or Governors under this chapter except as provided in this section. (emphasis added).
. The Domestic Mail Manual is a compendium of Postal Service rules promulgated and issued under its independent administrative authority to provide uniform interpretation and implementation of the Domestic Mail Classification Schedule (DMCS). The DMM is incorporated in the Code of Federal Regulations by reference pursuant to 39 C.F.R. § 111.1 .
. National Retired Teachers Ass’n v. United Postal Service, 430 F.Supp. 141 (D.D.C.1977), aff'd, 193 U.S.App.D.C. 206 , 593 F.2d 1360 (1979) and United Parcel Service v. United States Postal Service, 455 F.Supp. 857 (E.D.Pa.1973), aff'd, 604 F.2d 1370 (3d Cir.1979), cert. denied, 446 U.S. 957 , 100 S.Ct. 2929 , 64 L.Ed.2d 815 (1980), relied upon by the Commission, the district court, and now the panel majority of this court, as precedent for invoking the jurisdiction of the district court in mail classification and rate cases without first exhausting administrative remedies, are two district court decisions outside of this circuit wherein the jurisdictional issue of the instant case or any jurisdictional issue was not joined by the parties or considered by the courts. In both instances, the court of appeals summarily affirmed the district court’s disposition without comment.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9479802. Public record. Not legal advice.