Petition for Writ of Certiorari — Postal Service v. Flamingo Industries (USA) Ltd.

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021290 2003

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In the Supreme Court of the United States

UNITED STATES POSTAL SERVICE, PETITIONER

FLAMINGO INDUSTRIES (U.S. A.) LTD.

AND ARTHUR WAH

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

THEODORE B. OLSON

Solicitor General

Counsel of Record

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

EDWIN S. KNEEDLER

Deputy Solicitor General

LISA S. BLATT

Assistant to the Solicitor

General

MARK B. STERN

R. CRAIG GREEN

Attorneys

Department of Justice

Washington, D.C. 20530-0001 |

(202) 514-2217

QUESTION PRESENTED

The federal antitrust laws apply to a “person,” which

is defined to include “corporations and associations

existing under or authorized by the laws of * * * the

United States.” 15 U.S.C. 7 (Sherman Act), 12(a)

(Clayton Act). The question presented is whether the

United States Postal Service is a “person” amenable to

suit under the antitrust laws.

(I)

TABLE OF CONTENTS

Statutory provisions involved .

Statement 5 —

Reason for granting the petition .

A. The court of appeals’ decision conflicts with

United States v. Cooper and appellate decisions

holding that the United States and its agencies and

instrumentalities are not persons subject to suit

under the antitrust laws

B. The court of appeals’ decision conflicts with

FDIC v. Meyer and other appellate decisions

holding that Congress’s waiver of a federal

agency’s sovereign immunity from suit does not

create a cause of action against the agency ......

C. The court of appeals’ decision threatens to im-

pose unwarranted costs and liabilities on the

— 2

Conelusion

Appendix A P

TABLE OF AUTHORITIES

Cases:

Air Courier Conf. v. American Postal Workers

Union, 498 U.S. 517 (1991)

Baker v. Runyon, 114 F.3d 668 (7th Cir. 1997),

cert. denied, 525 U.S. 929 (1998)

Bivens v. Six Unknown Named Agents, 403 U.S.

388 (1971)

Champaign-Urbana News Agency, Inc. v. J.L.

Cummins News Co., 632 F. 2d 680 (7th Cir. 1981)

(III)

e =

9, 18

15, 17

Cases—Continued: Page

Department of Water & Power v. Bonneville Power

Admin., 759 F 2d 684 (9th Cir. 1985) 11

Emery Worldwide Airlines, Inc. v. United States, 264

F.3d 1071 (Fed. Cir. 2001) 4

EPA v. California ex rel. State Water Res.

Control Bd., 426 U.S. 200 (1976) 6

FDIC v. Meyer, 510 U.S. 471 (1994) 3, 5,6

13, 14, 15, 16, 17

FHA v. Burr, 309 U.S. 242 (1940) 14

Franchise Tax Bd. v. United States Postal Serv.,

467 U.S. 512 (1984) — 14

Greenwood Util. Comm'n v. Mississippi Power Co.,

751 F.2d 1484 (5th Cir. 1985) 10

International Primate Prot. League v. Tulane Educ.

Fund, 500 U.S. 72 (1991) 6

Jet Courier Servs., Inc. v. Federal Reserve Bank,

713 F.2d 1221 (6th Cir. 1983) 10

Loeffler v. Frank, 486 U.S. 549 (1988) 14, 15

Name.Space, Inc. v. Network Solutions, Inc.,

202 F. 3d 573 (2d Cir. 2000) 10

Regents of the Univ. of Cal. v. Doe, 519 U.S. 425 -

(1997) 7

Rex Sys., Inc. v. Holiday, 814 F. 2d 994 (4th Cir.

1987) 10

Robinson v. Runyon, 149 F.3d 507 (6th Cir. 1988) 15, 16

Sakamoto v. Duty Free Shoppers, Ltd., 764 F.2d

1285 (9th Cir. 1985), cert. denied, 475 U.S. 1081

(1986) 11

Sea Land Serv., Inc. v. Alaska R. R., 659 F 2d 243

(D.C. Cir. 1981), cert. denied, 455 U.S. 919 (1982) 3, 9,

10, 11

Town of Hallie v. City of Eau Claire, 471 US. 34

(1985) 20

United States v. Cooper Corp., 312 U.S. 600

(1941) 3, 4,5

Cases Continued: Page

United States Postal Serv. v. Council of Greenburgh

Civic Ass'n, 453 U.S. 114 (1981) 4,7

Vermont Agency of Natural Res. v. United States

ex rel. Stevens, 529 U.S 765 (2000) 6

Will v. Michigan Dep't of State Police, 491 U.S. 58

(1989) 6

Young, In re, 869 F.2d 158 (2d Cir. 1989) 17

US. Const. Art. I, § 8, Cl. 7 7

Act of Sept. 22, 1789, ch. 16, 1 Stat. 70 7

Act of Mar. 3, 1845, ch. 43, § 10, 5 Stat. 736 7

Act of June 8, 1872, ch. 335, 17 Stat. 283 7

Act of July 7, 1955, Pub. L. No. 84-137, 69 Stat. 282 9

Administrative Procedure Act, 5 U.S.C. 702 11

Civil Rights Act of 1964, Tit. VII, 42 U.S.C. 2000 e

et seq. _ — 14-15, 16,17

§ 717, 42 U.S.C. 2000e-1 15

Clayton Act, 15 U.S.C. 12 et seg.

15 U.S.C. 15(a) 18

15 U.S.C. 15a (Supp. III 1956) 5

Clean Water Act, 33 U.S.C. 13625) 6

False Claims Act, 31 U.S.C. 3729 6

Lanham Act, 15 U.S.C. 1127 6

Postal Reogranization Act of 1970, Pub. L. No. 91-375,

1 Stat. 719 (39 U.S.C. 101 et seg.) 7

39 U.S.C. 101(a) 8, 3la

39 U.S.C. 201 4, 8, 33a

39 U.S.C. 202 8

39 U.S.C. 202(a) 8

39 U.S.C. 202(c) x

39 U.S.C. 202(d) ..... 8

39 U.S.C. 205(d) 8

39 U.S.C. 401(1) 2, 13, 15, 16, 17, 33a

39 U.S.C. 401(9) 8, 34a

39 U.S.C. 401(10) 19, 34a

Statutes—Continued:

39 U.S.C. 403

39 U.S.C. 404(7)

39 U.S.C. 407

39 U.S.C. 410

39 U.S.C. 601-606

39 U.S.C. 1001

39 U.S.C. 1011

39 U.S.C. 2001

39 U.S.C. 2003

39 U.S.C. 2006(c)

39 U.S.C. 2008(c)

39 U.S.C. 3621

Sherman Act, 15 U.S.C. 1 et seg.

15 US.C.1

15 U.S.C. 2

15 US.C.7

7 US.C. 942

7 U.S.C. 1506

12 US.C. 341

12 U.S.C. 635(a)(1)

12 U.S.C. 1441a(aX5\J)

12 US.C. 1441(>(9E)

12 U.S.C. 1725(e)(4) (1988)

12 U.S.C. 1788000)

12 U.S.C. 1819

12 U.S.C. 2013(4)

12 U.S.C. 2073(4)

12 U.S.C. 2093

12 U.S.C. 2278a-3

12 U.S.C. 2278b-4

12 U.S.C. 2279aa-3

12 U.S.C. 22891)

15 U.S.C. 13a

15 U.S.C. 634(b)(1)

15 U.S.C. 714b

18 U.S.C. 1693-1699

5 5

S © © © 0 & Ow &

—

——

—

NDS 8S 88888

VII

Statutes—Continued:

22 U.S.C. 290f

22 U.S.C. 21990)

28 U.S.C. 144) (1988)

28 U.S.C. 1491(b\(1)

28 U.S.C. 2402

29 U.S.C. 1302(b\(1)

42 U.S.C. 1981a(b)(1)

42 U.S.C. 1983

Miscellaneous:

United States Postal Service:

2002 Annual Report

Transformation Plan (Apr. 2002)

In the Supreme Court of the United States

No.

UNITED STATES POSTAL SERVICE, PETITIONER

FLAMINGO INDUSTRIES (U.S. A.) LTD.

AND ARTHUR WAH

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

The Solicitor General, on behalf of the United States

Postal Service (Postal Service), respectfully petitions

for a writ of certiorari to review the judgment of the

United States Court of Appeals for the Ninth Circuit in

this case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra, Ia-

22a) is reported at 302 F.3d 985. The opinion of the

district court (App., infra, 23a-27a) is unreported.

JURISDICTION

The judgment of the court of appeals was entered on

August 23, 2002. A petition for rehearing was denied

on November 4, 2002 (App., infra, 28a-29a). On

January 23, 2003, Justice O’Connor extended the time

(1)

within which to file a petition for a writ of certiorari to

and including March 4, 2003. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

STATUTORY PROVISIONS INVOLVED

The relevant statutory provisions are reproduced at

App., infra, 30a-34a.

STATEMENT

1. Flamingo Industries (USA) Ltd. (Flamingo), a

manufacturer of mail sacks, and its owner, Arthur Wah,

brought suit in the United States District Court for the

Northern District of California against the Postal

Service in connection with the Postal Service’s termina-

tion of a contract with Flamingo to produce U.S. Mail

sacks. In addition to asserting claims under the federal

procurement laws and state law, the complaint stated

five federal antitrust claims, alleging that the Postal

Service sought to suppress competition and create a

monopoly in mail sack production by procuring cheaper

mail sacks that were manufactured in Mexico. The

district court dismissed the complaint in its entirety.

App., infra, 23a-27a. It dismissed the antitrust claims

on the ground that Congress did not intend to impose

antitrust liability on the Postal Service. Id. at 23a-24a.

The district court explained that, although Congress

has waived the Postal Service’s sovereign immunity in

39 U.S.C. 401(1) by permitting the agency “to sue and

be sued” in its own name, “such language cannot * * *

subject [the Postal Service] to liability under the

antitrust laws as there was no attempt on the part of

Congress to impose liability in the first place.” App.,

infra, 24a (internal quotation marks omitted).

2. The United States Court of Appeals for the Ninth

Circuit reversed, in relevant part, holding that the

Postal Service is a “person” subject to suit under the

federal antitrust laws. App., infra, la-22a. The court of

appeals acknowledged (id. at 4a) that the issue of a

federal agency’s amenability to suit is governed by this

Court’s two-step inquiry set forth in FDIC v. Meyer,

510 U.S. 471, 484 (1994), under which a court must

determine, first, whether Congr. 3s has waived the

agency’s sovereign immunity and, second, whether “the

source of substantive law upon which the claimant

relies provides an avenue for relief” against the federal

government.

Under Meyers first step, the court of appeals held

that Congress waived the Postal Service’s sovereign

immunity by providing in 39 U.S.C. 401(1) that At jhe

Postal Service shall have the . . . power[] to sue and

be sued in its official name.” App., infra, 4a (brackets in

original). In considering the second question, whether

the antitrust laws provide a cause of action against the

Postal Service, the court of appeals rejected the Postal

Service’s reliance on precedent (e.g., United States v.

Cooper Corp., 312 U.S. 600 (1941); Sea-Land Serv., Inc.

v. Alaska R.R., 659 F.2d 243 (D.C. Cir. 1981), cert.

denied, 455 U.S. 919 (1982)) holding that the United

States and its instrumentalities are not “persons”

subject to suit under the antitrust laws. The court

reasoned that, “[a]lthough a federal sovereign is not a

‘person,’ the Postal Service is not a sovereign” because

“the Postal Service does not enjoy sovereign immu-

nity.” App., infra, 8a. The court accordingly concluded

that t he Postal Service’s sue-and-be-sued waiver of

immunity has created a presumption that the cloak of

sovereignty has been withdrawn and that the Postal

Service should be treated as a private corporation.” Id.

at 10a. The court stated, however, that the Postal

Service may assert “conduct-based” immunity against

antitrust liability “if the action of the Postal Service

being challenged was taken at the command of Con-

gress.” Id. at 13a.

On November 4, 2002, the court of appeals denied the

government’s petition for rehearing and rehearing en

banc. App., infra, 28a-29a.

REASONS FOR GRANTING THE PETITION

Since the founding of this Nation, postal service op-

erations have constituted an essential “sovereign func-

tion.” United States Postal Serv. v. Council of Green-

burgh Civic Ass’ns, 453 U.S. 114, 121 (1981). Congress

carried forward that tradition in the Postal Reorganiza-

tion Act of 1970 by creating the Postal Serice as “an

independent establishment of the executive branch of

the Government of the United States.” 39 U.S.C. 201.

Notwithstanding the Postal Service’s manifestly

governmental character, the court of appeals held that

the Postal Service is “not a sovereign” and, therefore, is

a “person” subject to suit under the federal antitrust

laws. App., infra, Sa.

The court of appeals’ decision conflicts with the

decision of this Court in United States v. Cooper Corp.,

312 U.S. 600 (1941), that the United States is not a per-

son” under the antitrust laws. The decision conflicts as

well with the decisions of the courts of appeals that

1 The court of appeals also reinstated the plaintiffs’ claim under

28 U.S.C. 1491(b)(1) alleging violations of the Postal Service’s

Procurement Manual, and affirmed the district court’s dismissal of

the remaining claims. App., infra, 13a-22a. On the procurement

claim, the court held, following the Federal Circuit’s decision in

Emery Worldwide Airlines, Inc. v. United States, 264 F.3d 1071,

1080-1081 (2001), that the Postal Service is a “federal agency”

within the meaning of 28 U.S.C. 1491(b)(1), which provides for

jurisdiction in the Court of Federal Claims (and in the district

court in this case) over suits challenging contract actions in viola-

tion of procurement laws or regulations. See App., infra, 15a.

have held that federal instrumentalities likewise are

not “persons” subject to antitrust liability.

The court of appeals’ decision also conflicts with the

Court’s ruling in FDIC v. Meyer, 510 U.S. 471 (1994),

that Congress’s waiver of sovereign immunity with

respect to a federal entity does not create a substantive

cause of action against the entity. The court of appeals’

decision similarly conflicts with the decisions of other

courts of appeals that have specifically held that Con-

gress’s waiver of the Postal Service’s sovereign immu-

nity does not create liability against the Postal Service.

The court of appeals’ decision exposes the Postal Ser-

vice to significant and unwarranted litigation costs

under the antitrust laws, which include treble damages

and attorneys’ fees. That result could undermine the

ability of the Postal Service to carry out its legislative

mandate to provide universal mail service at reasonable

rates. This Court’s review is accordingly warranted.

A. The Court Of Appeals’ Decision Conflicts With United

States v. Cooper And Appellate Decisions Holding

That The United States And Its Agencies And

Instrumentalities Are Not “Persons” Subject To Suit

Under the Antitrust Laws

1. This Court in United States v. Cooper Corp., 312

U.S. 600, 604-606 (1941), held that Congress did not

intend the statutory term “person” as used in the

antitrust laws to include the United States. The Court

therefore rejected the federal government’s contention

that the United States is a “person” authorized to sue

for treble damages under the Sherman Act. The Court

reasoned that, if the United States were a “person”

entitled to sue, the United States would likewise be a

“person” subject to liability under the Sherman Act,

since the term has the same meaning when used

throughout the Act. Id. at 604-610. Concluding that

the United States is not a “person” in either instance,

the Court explained that, [without going beyond the

words of the section,” “the phrase ‘any person’ is insuf-

ficient” to encompass the United States. Id. at 606.

Just as Congress did not intend the United States to

be a “person” under the antitrust laws, Congress did

not intend an agency or instrumentality of the United

States to be a “person” under those laws. This Court

repeatedly has held that Congress’s intent to exclude

the sovereign from the statutory term “person” equally

excludes agencies and instrumentalities of the sover-

eign. The Court thus has concluded that state agencies

are not persons liable under the False Claims Act, 31

U.S.C. 3729 (Vermont Agency of Natural Res. v.

United States ex rel. Stevens, 529 U.S. 765, 778-788

(2000)); that federal agencies were not persons under

the removal provisions of 28 U.S.C. 1442(a)(1) (1988)

(International Primate Prot. League v. Tulane Educ.

Fund, 500 U.S. 72, 82-83 (1991)); that state agencies are

not persons liable under 42 U.S.C. 1983 (Will v.

Michigan Dep’t of State Police, 491 U.S. 58, 64 (1989));

and that federal instrumentalities are not “persons”

under the Clean Water Act, 33 U.S.C. 1362(5) (EPA v.

California ex rel. State Water Res. Control Bd., 426

U.S. 200, 222 n.37 (1976)). Where Congress has in-

tended a contrary conclusion, it has expressly so pro-

vided. See, eg., 15 U.S.C. 1127 (defining “person”

amenable to suit under the Lanham Act to include “the

United States [or] any agency or instrumentality

thereof“).

2 Similarly, governmental agencies and instrumentalities

equally share in the immunity of the sovereign. FDIC v. Meyer,

510 U.S. 471, 475 (1994) (“Absent a waiver, sovereign immunity

The exclusion of the United States from the term

“person” in federal statutes applies with equal force to

United States agencies and instrumentalities such as

the Postal Service. The Postal Service is a quintessen-

tial agency or instrumentality of the United States.

This country, like foreign nations, has from the begin-

ning treated postal services as “a sovereign function”

and “a sovereign necessity.” United States Postal Serv.

v. Council of Greenburgh Civic Ass’ns, 453 U.S. at 121.

The Continental Congress in 1775 appointed Benjamin

Franklin as Postmaster General responsible for the

delivery of mail. Ibid. And exercising its constitutional

authority t jo establish Post Offices and Post Roads,”

U.S. Const. Art. I, § 8, Cl. 7, the First Congress in 1789

created the Office of the Postmaster General to oversee

federal postal operations. Act of Sept. 22, 1789, ch. 16,

1 Stat. 70. Congress later granted the Postal Service

exclusive rights to transmit letters, packages, and

“other mailable matter,” Act of Mar. 3, 1845, ch. 43,

§ 10, 5 Stat. 736, and formally established the Post

Office Department as a department of the Executive

Branch. Act of June 8, 1872, ch. 335, 17 Stat. 283.

Under the Postal Reorganization Act of 1970, Pub. L.

No. 91-375, 84 Stat. 719, Congress transferred the

responsibilities of the Post Office Department to the

Postal Service. Congress did not establish the Postal

Service as a corporation with a corporate charter or

equity ownership interests. Thus, contrary to the court

of appeals’ belief (App, infra, IIa), Congress made no

shields the Federal Government and its agencies from suit.”); see

Regents of the Univ. of Cal. v. Doe, 519 U.S. 425, 429 (1997) (“It has

long been settled that the reference to actions ‘against one of the

United States’ encompasses not only actions in which a State is

actually named as the defendant, but also certain actions against

state agents and state instrumentalities.”).

change in 1970 that would bring the Postal Service

within the definition of “person” in 15 U.S.C. 7 which

includes “corporations” organized under the laws of the

United States or a State or territory. Rather, Congress

created the Postal Service as “an independent estab-

lishment of the executive branch of the Government of

the United States.” 39 U.S.C. 201. Indeed, Congress

expressly stated that “a basic and fundamental service”

would thereby be “provided to the people by the

Government of the United States * * * to bind the

Nation together through the personal, educational, lit-

erary, and business correspondence of the people.” 39

U.S.C. 101(a) (emphasis added).

The Postal Service is run by a Board of Governors

whose eleven members are officerſs] of the Govern-

ment.” 39 U.S.C. 202, 205(d). The President appoints,

subject to Senate confirmation, nine of the eleven mem-

bers, who in turn select the remaining two members,

the Postmaster General and the Deputy Postmaster

General. 39 U.S.C. 202(a), (c) and (d). Postal Service

employees are federal employees who must take a

public oath of office, 39 U.S.C. 410, 1001, 1011, and all

liabilities incurred by the Postal Service, such as liti-

gation judgments and settlements, are ultimately

financed by the public fisc, 39 U.S.C. 2001, 2003, 2008(c).

The Postal Service has uniquely federal sovereign

powers, including the authority “to exercise, in the

name of the United States, the right of eminent

domain” (39 U.S.C. 401(9)); to negotiate international

postal treaties and conventions (39 U.S.C. 407); to

borrow on the United States’ “full faith and credit” (39

U.S.C. 2006(c)(1)); and “to investigate postal offenses

and civil matters relating to the Postal Service” (39

U.S.C. 404(7)). Congress has also given the Postal

Service exclusive rights over the carriage of letters to

and from the United States. Air Courier Conf. v.

American Postal Workers Union, 498 U.S. 517, 519

(1991) (citing 39 U.S.C. 601-606 and 18 U.S.C. 1693-

1699). Because these various provisions of the Postal

Reorganization Act make clear that the Postal Service

is an agency or instrumentality of the United States, it

is not subject to suit under the antitrust laws.

2. The court of appeals’ treatment of the Postal Ser-

vice as a “person” under the antitrust laws conflicts

with the consistent view of other courts of appeals that

have concluded that Congress’s exclusion of the United

States from the term “person” applies with equal force

to its agencies and instrumentalities. In the first

appellate decision to address the issue, Sea-Land Serv.

Inc. v. Alaska R. R., 659 F.2d 243, 245 (1981), cert. de-

nied, 455 U.S. 919 (1982), the D.C. Circuit, in an opinion

authored by then-Judge Ginsburg, held that the Sher-

man Act “does not expose United States instrumentali-

ties to liability * * * for conduct alleged to violate

antitrust constraints.”

As the D.C. Circuit explained (659 F.2d at 245), Con-

gress responded to the Court’s decision in Cooper,

supra, by amending the Clayton Act, Pub. L. No. 84-

137, 69 Stat. 282, to authorize the United States to

bring an action for actual, but not treble, damages. 15

U.S.C. 15a (Supp. III 1956). “Given the discrete con-

sideration Congress gave to the situation of the United

States, after the decision in Cooper Corp., as a Sherman

Act damage action plaintifi, and the legislature’s total

silence on the situation of the United States as a

Sherman Act defendant,” the D.C. Circuit declined to

impose liability against the United States when Con-

gress itself “failed to do” so. Sea-Land, 659 F.2d at

246. The court of appeals therefore concluded that the

antitrust laws did not reach the Alaska Railroad and its

supervising United States agencies, even though such

entities may operate] alongside private companies”

and provide goods and services similar to those avail-

able in the marketplace. Id. at 247.

The other courts of appeals that have considered the

issue have followed the Sea-Land decision and have

likewise held that federal agencies and instrumentali-

ties are not amenable to suit under the ant: st laws.

Thus, the Sixth Circuit in Jet Courier Servi s, Inc. v.

Federal Reserve Bank, 713 F.2d 1221, 1228 (1983), held

that the Federal Reserve Banks are not persons under

the Sherman Act. The Sixth Circuit explained that

Hals an agency of the federal government the Federal

Reserve System may not be sued under the Sherman

Act.” Id. at 1228 (citing Sea-Land, supra). The Second

Circuit in Name.Space, Inc. v. Network Solutions, Inc.,

202 F.3d 573, 580-581 (2000), also followed Sea-Land

and concluded that the National Science Foundation is

not subject to the antitrust laws. The court explained

that “the scope of the immunity conferred as a result of

being a federal instrumentality is paradigmatically

equivalent to that enjoyed by the United States itself,

and therefore absolute.” Id. at 581.

The Fourth Circuit in Rex Systems, Inc. v. Holiday,

814 F.2d 994, 995-997 (1987), similarly found “the Sea-

Land court’s holding to be persuasive” and held that

the Department of the Navy is not a person under the

Sherman Act. Likewise, the Fifth Circuit in Greenwood

Utility Commission v. Mississippi Power Co., 751 F.2d

1484, 1504 (1985), relied on the Sea-Land decision and

held that the Southeastern Power Administration is, “of

course, not subject to the antitrust laws.” Finally, the

Seventh Circuit concluded that the Army and Air Force

Exchange Service “is a governmental instrumentality”

and therefore not subject to suit under the Clayton Act.

Champaign-Urbana News Agency, Inc. v. J.L.

Cummins News Co., 632 F.2d 680, 689, 692 (1980).

Thus, in ruling that an agency or instrumentality of

the United States is subject to suit under the antitrust

laws, the court of appeals has departed from the

uniform course of lower court decisions.

3. The court of appeals attempted to distinguish

Sea-Land and later decisions because the court of

appeals viewed those decisions to “require (or assume)

that the federal instrumentality at issue enjoys sover-

eign immunity.” App., infra, 10a. That is not correct.

Sea-Land did not turn on the presence or absence of

sovereign immunity from suit generally. Indeed, the

D.C. Circuit explicitly recognized that Section 702 of

the Administrative Procedure Act, 5 U.S.C. 702, had

“eliminate[d] the defense of sovereign immunity for

actions in specific, nonmonetary relief.” 659 F.2d at

244-245. The court of appeals accordingly observed

that, Iwlere sovereign immunity our sole concern,

* * * we would hold the named United States agencies

and officials answerable in this action.” Id. at 244. The

court nonetheless held that the substantive provisions

of the Sherman Act do not reach “United States

instrumentalities.” Jd. at 245.

Similarly, the Sixth Circuit’s decision in Jet Courier

held that the antitrust laws do not apply to a Federal

Reserve Bank, which may “sue and be sued” under 12

U.S.C. 341. Although the decision in Jet Courier did

The court of appeals itself had previously stated that the

assertion of antitrust liability against a federal agency was “frivo-

lous.” Department of Water & Power v. Bonneville Power Admin.,

759 F 2d 684, 693 n.12 (1985); see Sakamoto v. Duty Free Shoppers,

Lid., 764 F.2d 1285, 1286, 1288 (1985) (holding that the Guam

Airport Authority is not a person subject to antitrust liability),

cert. denied, 475 U.S. 1081 (1986).

not discuss Congress’s waiver of the Federal Reserve

Bank’s sovereign immunity in 12 U.S.C. 341, the court

of appeals’ holding in this case that the Postal Service is

a person subject to antitrust liability by virtue of a

“sue-and-be-sued” clause is fundamentally inconsistent

with the result reached by the Sixth Circuit in Jet

Courier.

B. The Court Of Appeals Decision Conflicts With FDIC v.

Meyer And Other Appellate Decisions Holding That

Congress’s Waiver Of A Federal Agency's Sovereign

Immunity From Suit Does Not Create A Cause Of

Action Against The Agency

1. In holding that a cause of action under the anti-

trust laws may be maintained against the Postal

Service, the court of appeals relied solely on the fact

that Congress has waived the Postal Service’s sover-

eign immunity by permitting it “to sue and be sued”

Congress in similar terms has waived the government's sov-

ereign immunity with respect to numerous other federal entities.

7 U.S.C. 942 (Rural Telephone Bank); 7 U.S.C. 1506 (Federal Crop

Insurance Corporation); 12 U.S.C. 635(a)(1) (Export-Import Bank

of the United States); 12 U.S.C. 1441a(a)(5)\(J) (Thrift Depositor

Protection Oversight Board); 12 U.S.C. 1441a(b)(9(E) (Resolution

Trust Corporation); 12 U.S.C. 1789(a)(2) (National Credit Union

Administration); 12 U.S.C. 1819 (Federal Deposit Insurance Cor-

poration); 12 U.S.C. 2013(4) (Farm Credit Banks); 12 U.S.C.

2073(4) (Production Credit Associations); 12 U.S.C. 2093 (Federal

Land Bank Associations); 12 U.S.C. 2278a-3 (Farm Credit System

Assistance Board); 12 U.S.C. 2278b-4 (Farm Credit System Finan-

cial Assistance Corporation); 12 U.S.C. 2279aa-3 (Federal Agricul-

tural Mortgage Corporation); 12 U.S.C. 22891) (Federal Financing

Bank); 15 U.S.C. 634(b)(1) (Small Business Administration); 15

U.S.C. 714b (Commodity Credit Corporation); 22 U.S.C. 290f

(Inter-American Foundation); 22 U.S.C. 2199(d) (Overseas Private

Investment Corporation); 29 U.S.C. 1302(b)(1) (Pension Benefit

Guaranty Corporation).

under 39 U.S.C. 401(1). The court of appeals concluded

that such a waiver of sovereign immunity deprives the

Postal Service of its status as a governmental entity.

App., infra, 4a (“[Tjhe Postal Service lost its sovereign

status pursuant to the Postal Reorganization Act of

1970 * * * which provides in relevant part that ‘The

Postal Service shall have the . . . power I] to sue and

be sued.”); id. at 8a (“Although a federal sovereign is

not a ‘person,’ the Postal Service is not 2 sovereign.”);

id. at 10a (“Here, the Postal Service does not enjoy

federal sovereignty.”); ibid. (“The Postal Service’s sue-

and-be-sued waiver of immunity has created a pre-

sumption that the cloak of sovereignty has been with-

drawn.”); id. at 13a (“Congress has stripped the Postal

Service of its sovereign status by launching it into the

commercial world as a sue-and-be-sued entity akin to a

private corporation.”).

The court of appeals’ decision that a statutory waiver

of sovereign immunity in a “sue and be sued” clause

exposes the Postal Service to a cause of action under

the antitrust laws squarely conflicts with the Court’s

decision in FDIC v. Meyer, 510 U.S. 471 (1994). The

Court in Meyer held that, although Congress waived

the sovereign immunity of the FSLIC with a “sue-and-

be-sued” clause (12 U.S.C. 1725(c)(4) (1988)), there

nonetheless is no cause of action under Bivens v. Six

Unknown Named Agents, 403 U.S. 388 (1971), against

federal instrumentalities. The Court in Meyer thus

held that the court of appeals had erred in determining

that “Meyer had a cause of action for damages against

FSLIC because there had been a waiver of sovereign

immunity.” 510 U.S. at 483-484. The court explained

that such “reasoning conflates” the question whether

there is a waiver of a sovereign immunity with the

“analytically distinct” question whether Congress

intended to create a cause of action. Id. at 484. The

Court held that notwithstanding a waiver of sovereign

immunity, a court must independently find that “the

source of substantive law upon which the claimant

relies provides an avenue for relief” against the govern-

ment and its agencies. bid.

The court of appeals seriously erred in holding that,

because Congress waived the Postal Service’s sover-

eign immunity to suit, Congress intended to subject the

Postal Service to the antitrust laws. Indeed, Con-

gress’s waiver of the Postal Service’s sovereign immu-

nity necessarily presupposes that the Postal Service is

a sovereign arm of the United States Government and,

as such, is not a “person” subject to suit under the

antitrust laws.

2. a. For similar reasons, the court of appeals erred

in relying (App., infra, 4a-6a, 8a, 10a) on this Court’s

decisions in Franchise Tax Board v. United States

Postal Service, 467 U.S. 512 (1984), and Loeffler v.

Frank, 486 U.S. 549 (1988), as a basis for imposing

substantive liability under the antitrust laws on the

Postal Service. Those decisions did not work a radical

change in the Court’s jurisprudence, as the court of

appeals seemed to believe. In Franchise Tax Board,

the Court simply held that a “sue-and-be-sued” clause

—which the Court had previously held in FHA v. Burr,

309 U.S. 242 (1940), subjects the federal agency con-

cerned to garnishment orders issued by a state court—

also applies to garnishment orders issued by a state

administrative agency. In so ruling, the Court noted

that the Postal Service was simply a stakeholder of the

employee’s wages that were the subject of the garnish-

ment order. 467 U.S. at 520. In Loeffler, the Court

simply applied to suits against the Postal Service under

Title VII of the Civil Rights Act of 1964, 42 U.S.C.

2000e et seq., the already-settled rule (see 486 U.S. at

555) that the waiver of sovereign immunity in a “sue-

and-be-sued” clause operates to waive the otherwise

applicable rule of immunity of the federal government

to an award of prejudgment interest.

Neither Franchise Tax Board nor Loeffler suggested

that the “sue-and-be-sued” clause in Section 401(1)

constitutes anything more than a waiver of sovereign

immunity, or that such a clause is sufficient in itself to

subject the Postal Service (or any other federal agency

or instrumentality whose organic statute contains a

similar clause) to new sources of liability under sub-

stantive law, such as the antitrust laws. 39 U.S.C.

401(1). Indeed, the Court in Loeffler explicitly recog-

nized that the source of the Postal Service’s liability

under Title VII derives not from its “sue-and-be-sued”

clause and the provisions of Title VII that apply to

private parties, but rather from the separate and

express provision under Section 717 of Title VII, 42

U.S.C. 2000e-16, provides for a cause of action against

federal entities. 486 U.S. at 563. And the Court’s sub-

sequent decision in Meyer, 510 U.S. at 484, makes

abundantly clear that Congress’s waiver of sovereign

immunity does not by its own force create a cause of

action against federal entities.

b. The court of appeals’ holding that the “sue-and-

be-sued” clause in 39 U.S.C. 401(1) creates an antitrust

cause of action against the Postal Service conflicts with

decisions of the courts of appeals that have held—

subsequent to Franchise Tax Board and Loeffler—that

the “sue-and-be-sued” clause does not provide an inde-

pendent source of liability against the Postal Service.

The Sixth Circuit in Robinson v. Runyon, 149 F.3d

507 (1998), and the Seventh Circuit in Baker v. Runyon,

114 F.3d 668 (1997), cert. denied, 525 U.S. 929 (1998),

have held that Congress’s waiver of sovereign immu-

nity in 39 U.S.C. 401(1) does not render the Postal

Service liable for punitive damages under Title VII

because such awards are not applicable to any “govern-

ment [or] government agency” (see 42 U.S.C.

1981a(b)(1)). The Sixth Circuit in Robinson noted that

although the Postal Service_is a “commercial like”

operation, “it functions as part of the federal govern-

ment,” exercises “uniquely governmental powers such

as the authority to borrow money backed by the full

faith and credit of the United States Government, the

right of eminent domain, and the right to negotiate in-

ternational postal treaties and conventions,” and “ shall

be operated as a basic and fundamental service pro-

vided to the people by the Government of the United

States.” 149 F.3d at 516 (citations omitted) (quoting 39

U.S.C. 101(a)). The court therefore concluded that,

notwithstanding the waiver of sovereign immunity in

the “sue-or-be-sued” clause, there is no “substantive

law” that provides for punitive damages against gov-

ernment agencies. Id. at 517 (citing FDIC v. Meyer,

510 U.S. at 484). The court reasoned:

[Simply because Congress has provided that an

entity may generally be sued for damages does not

equate with the presumption that the particular law

under which a plaintiff brings suit will permit such

damages awards. * * * The mere fact that Con-

gress even had to explicitly waive the sovereign

immunity of the Postal Service in the first place

indicates that Congress considered the Postal Ser-

vice a federal agency, or otherwise such a waiver

would be unnecessary.

Ibid. The Seventh Circuit in Baker similarly employed

the two-step inquiry under Meyer and concluded that

Congress’s waiver of sovereign immunity does not

render the Postal Service liable for punitive damages

under Title VII. 114 F.3d at 670-671.

In an analogous context, the Second Circuit in In re

Young, 869 F.2d 158, 159 (1989) (per curiam), held that

Congress’s waiver of sovereign immunity in 39 U.S. C.

401 (i) does not subject the Postal Service to trial by

jury because 28 U.S.C. 2402 prohibits trial by jury

against “the United States.” The court of appeals

explained that “the waiver of sovereign immunity does

not, by itself, grant a right to trial by jury in an action

against the federal government.” 869 F. 2d at 159. The

court according’y concluded that “the waiver does not

change the fact that the party being sued is still the

federal government.” Ibid.

The decisions in Robinson, Baker, and Young, each

hold that the Postal Service’s amenability to suit under

39 U.S.C. 401(1) does not deprive the Postal Service of

its governmental character and independently create a

substantive right against the Postal Service. Those

decisions cannot be reconciled with the court of appeals’

holding below that the Postal Service is subject to suit

under the antitrust laws solely by virtue of Congress’s

waiver of sovereign immunity in 39 U.S.C. 401(1).

C. The Court Of Appeals’ Decision Threatens To Impose

Unwarranted Costs And Liabilities On The Postal

Service

1. This Court’s review is warranted not only because

the court of appeals’ decision conflicts with decisions of

this Court and other courts of appeals, but also because

it seriously threatens to interfere with the operations of

the Postal Service. Congress has directed that the

Postal Service “shall provide adequate and efficient

postal services at fair and reasonable rates and fees”

and “shall serve as nearly as practicable the entire

population of the United States.” 39 U.S.C. 403. The

Postal Service also must operate “so that the total

estimated income and appropriations * * * will equal

as nearly as practicable total estimated costs.” 39

U.S.C. 3621. Subjecting the Postal Service to the

antitrust laws, whose sanctions include treble damages

and attorney’s fees (15 U.S.C. 15(a)), could significantly

impair the Postal Service’s ability to carry out its

legislative mandate to deliver universal mail service to

the entire nation under a break-even requirement.

The breadth and variety of the Postal Service’s op-

erations present an immediate likelihood of substantial

litigation costs and potential liabilities. The Postal

Service exercises exclusive distribution rights over the

carriage of letters to and from the United States, Air

Courier Conference v. American Postal Workers

Union, 498 U.S. at 519, and the Postal Service provides

express-mail, parcel, overseas, and other delivery ser-

vices by competing with private businesses. United

States Postal Service, 2002 Annual Report 52-53 (2002

Annual Report). The Postal Service employs 770,000

workers to deliver 200 billion pieces of mail each year

(40% of the world’s mail), and is the eleventh largest

enterprise in the Nation based on its $66 billion in

annual revenues. United States Postal Service, Trans-

formation Plan i (Apr. 2002) (2002 Transformation

Plan).

Application of the antitrust laws could impose signifi-

cant expenses and delay on Postal Service operations

that would inevitably flow from having to defend

against antitrust claims. In light of economic uncer-

5 Indeed, the antitrust laws provide for criminal penalties in

certain circumstances. See 15 U.S.C. 1, 2, 13a.

tainties, increased security needs, and advances in

communications technology that reduce the volume of

mail, 2002 Annual Report 16; 2002 Transformation

Plan i, 1-3, the Postal Service cannot readily afford

increased costs that Congress neither intended nor an-

ticipated. Indeed, the burdens associated with litiga-

tion costs, settlements, or judgments will be borne by

American citizens, either through higher service fees or

larger budgetary appropriations. 39 U.S.C. 2001, 2003,

2008(c).

2. Nor is the need for this Court’s review diminished

by the court of appeals’ statement that, although the

Postal Service is subject to suit under the antitrust

laws, it would recognize an exception from liability if

the “action being challenged by the Postal Service was

taken at the command of Congress.” App., infra, 13a.

The court of appeals’ decision would force the Postal

Service to undergo potentially extensive and costly

litigation to determine the precise contours of such an

exception and whether a court will deem it to apply in a

given case. Because Congress never intended to sub-

ject the Postal Service to suit under the antitrust laws

in the first place, there is no basis for imposing those

costs and burdens on the Postal Service.

That conclusion holds true regardless of how the

court of appeals envisioned that such an exception

might apply. Indeed, the exception would be largely

meaningless if the Postal Service had to prove that

Congress “command[ed]” the particular challenged

action at issue, because Congress commands relatively

few of the Postal Service’s commercial activities. The

salient fact is that the Postal Service is a federal agency

or instrumentality and is authorized to take all actions

“incidental, necessary, or appropriate to the carrying on

of its functions or the exercise of its specific powers.”

39 U.S.C. 401(10). At a minimum, the court of appeals’

decision would create an entirely unnecessary and

cumbersome regime by requiring the Postal Service to

prove, on a case-by-case basis, that the challenged ac-

tion was taken pursuant to a sufficient congressional

mandate. Cf. Town of Hallie v. City of Eau Claire, 471

U.S. 34, 39 (1985) (municipal action not shielded from

antitrust laws unless municipality establishes that it

was taken pursuant to a “clearly articulate and affirma-

tively expressed . . . state policy”) (citation omitted).

Because such a regime would itself impose litigation

costs and burdens that Congress never intended, this

Court’s review is warranted.

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

ROBERT D. MCCALLUM, JR.

Assistant Attorney General

EDWIN S. KNEEDLER

Deputy Solicitor General

LISA S. BLATT

Assistant to the Solicitor

General

MARK B. STERN

R. CRAIG GREEN

Attorneys

MARCH 2003

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 01-15963

FLAMINGO INDUSTRIES (USA) LTD. AND

ARTHUR WAH, PLAINTIFFS-APPELLANTS

LD.

UNITED STATES POSTAL SERVICE, AN ENTITY

CREATED PURSUANT TO THE POSTAL

REORGANIZATION ACT, DEFENDANT-APPELLEE

Filed Aug. 23, 2002

OPINION

Before: LAY,” THOMPSON, and TALLMAN, Circuit

Judges.

DAVID R. THOMPSON, Circuit Judge.

Plaintiffs Flamingo Industries and its owner Arthur

Wah (collectively “Flamingo”) brought suit in the

Northern District of California against the United

States Postal Service. Flamingo asserted a number of

federal and state law claims stemming from the Postal

Service’s termination of Flamingo’s contract to produce

U.S. Mail sacks. The district court dismissed the suit

for lack of jurisdiction and improper venue, and did not

The Honorable Donald P. Lay, Senior United States Circuit

Judge for the Eighth Circuit, sitting by designation.

(la)

reach the merits of any of the claims. Flamingo ap-

peals.

According to the allegations of Flamingo’s complaint,

which we take as true for purposes of this appeal, the

Postal Service terminated Flamingo’s contract because

it wanted to use cheaper mail sacks manufactured in

Mexico, sacks that fail to meet safety and quality regu-

lations. To disguise this scheme, the Postal Service

adopted outdated requirements for mail sacks that

could not be met by the modern machines used by Fla-

mingo and other domestic manufactures, creating a pre-

text for canceling the domestic mail sack contracts.

Once those contracts were canceled, the Service de-

clared a fake emergency in the supply of mail sacks that

allowed it to award future contracts to foreign manufac-

tures on a no-bid basis. The Service sought to hide the

false nature of this emergency by failing to follow

regulations requiring documentation of any emergency.

Based on this alleged conduct, Flamingo asserted five

federal antitrust claims, alleging that the Postal Serv-

ice, in collusion with Mexican mail sack manufacturers,

sought to suppress competition and create a monopoly

in mail sack production in violation of federal antitrust

laws. Flamingo also asserted claims alleging that the

Postal Service violated the Postal Service Procure-

ment Manual, the implied covenant of good faith and

fair dealing, California Business and Professions Code

§ 17200, and 42 U.S.C. § 1983.

The district court did not reach the merits of any of

these claims. It dismissed the federal antitrust claims

on the ground that the Postal Service was protected by

sovereign immunity from antitrust liability. It deter-

mined that the claim for breach of the implied covenant

of good faith and fair dealing was a tort claim, and dis-

missed it for lack of exhaustion under the Federal Tort

Claims Act. The court dismissed the remaining claims

on the ground that venue did not lie in the Northern

District of California.

We have jurisdiction under 28 U.S.C. § 1291. We af-

firm in part, reverse in part, and remand for further

proceedings. We conclude that: (1) Flamingo may pur-

sue claims against the Postal Service for alleged viola-

tions of federal antitrust laws because Congress has

withdrawn the cloak of sovereign immunity from the

Postal Service and given it the status of a private cor-

poration; (2) the district court had jurisdiction over

Flamingo’s Procurement Manual claim pursuant to

28 U.S.C. § 1491(b); (3) the court properly dismissed

Flamingo’s breach of implied covenant claim for failure

to exhaust under the Federal Tort Claims Act; (4) al-

though the district court had original jurisdiction over

Flamingo’s claim asserted under California Business &

Professions Code § 17200, that claim was properly dis-

missed because it is preempted by federal law; (5) Fla-

mingo’s 42 U.S.C. § 1983 claim fails to state a claim

upon which relief can be granted; and (6) venue for the

Postal Service Procurement Manual claim was properly

laid in the Northern District of California.

THE FEDERAL ANTITRUST LAW CLAIMS

Flamingo argues the district court erred in holding

that sovereign immunity bars its suit against the Postal

Service under federal antitrust laws. Flamingo con-

1 We do not distinguish between the various sections of the

federal antitrust laws relied upon by Flamingo in its complaint—15

U.S. C. $§ 1, 13, 13a, 14, 45—because all of these sections are sub-

tends the Postal Service lost its sovereign status pur-

suant to the Postal Reorganization Act of 1970, Pub. L.

No. 91-375, 84 Stat. 719 (codified as amended in Title 39

of the United States Code), which provides in relevant

part that “The Postal Service shall have the . . .

power[] to sue and be sued in its official name.” 39

U.S.C. § 401(1). We agree.

In FDIC v. Meyer, 510 U.S. 471, 484, 114 S. Ct. 996,

127 L. Ed. 2d 308 (1994), the Supreme Court applied a

two-step inquiry in analyzing whether a federal instru-

mentality enjoys immunity from a particular substan-

tive area of law. Under this analysis, It jhe first in-

quiry is whether there has been a waiver of sovereign

immunity.” Id. If there has been, “the second inquiry

. . . [is] whether the source of substantive law upon

which the claimant relies provides an avenue for relief.”

Id.

Following Meyer, we first consider whether 39

U.S.C. § 401(1) operates as a waiver of the Postal

Service’s sovereign immunity. More precisely, our in-

quiry is whether the sue-and-be-sued language of that

section waives sovereign immunity as to the plaintiffs’

antitrust claims.

The Supreme Court established the breadth of the

Postal Service’s sovereign immunity waiver in Frun-

chise Tax Board v. United States Postal Service, 467

U.S. 512, 104 S. Ct. 2549, 81 L. Ed. 2d 446 (1984).

There, the issue was whether the Postal Service had to

comply with a state tax board’s liens on Postal Service

employees’ salaries. The Court began its analysis by

ject to the same analysis as to the sovereign immunity issue pre-

sented.

recognizing that the general presumption is that a sue-

and be-sued clause should be liberally construed:

When Congress establishes . . . an agency, author-

izes it to engage in commercial and business transac-

tions with the public, and permits it to ‘sue and be

sued,’ it cannot be lightly assumed that restrictions on

that authority are to be implied.” Id. at 517 (quoting

FHA v. Burr, 309 U.S. 242, 245, 60 S. Ct. 488, 84 L. Ed.

724 (1940)). To overcome this presumption “it must be

clearly shown that certain types of suits are not consis-

tent with the statutory or constitutional scheme, that

an implied restriction of the general authority is nec-

essary to avoid grave interference with the perform-

ance of a governmental function, or that for other rea-

sons it was plainly the purpose of Congress to use the

‘sue and be sued’ clause in a narrow sense.” Id. at 517-

18 (quoting Burr, 309 U.S. at 245).

The Postal Service could not overcome the presump-

tion. In doing away with the Post Office Department

and creating the Postal Service in the Postal Reorgani-

zation Act, Congress had “indicated that it wished the

Postal Service to be run more like a business than had

its predecessor . . . Id. at 519-20. Congress had

“launched [the Postal Service] into the commercial

world’; hence under Burr not only must we liberally

construe the sue-and-be-sued clause, but also we must

presume that the Service’s liability is the same as that

of any other business.” Id. at 520 (brackets in original).

The Court reaffirmed the breadth of the Postal

Service’s waiver in Loeffler v. Frank, 486 U.S. 549, 108

S. Ct. 1965, 100 L. Ed. 2d 549 (1988). There, a mail car-

rier had successfully maintained a Title VII action

against the Postal Service and was seeking prejudg-

ment interest on his award of damages. Id. at 552.

Title VII allowed for actions against the federal govern-

ment, see 42 U.S.C. § 2000e-16, but it did not contain a

provision allowing for prejudgment interest against the

government. Indeed, just two years earlier, in Library

of Congress v. Shaw, 478 U.S. 310, 106 S. Ct. 2957, 92

L. Ed. 2d 250 (1986), the Supreme Court had held that

sovereign immunity barred the payment of interest on

an award under Title VII against the Library of Con-

gress. The Court in Loeffler, however, distinguished

Shaw because, unlike the Library of Congress, the

Postal Service’s sovereign immunity had been waived.

Loeffler, 486 U.S. at 554-56, 565.

The Court stressed the difference between a sover-

eign instrumentality, such as the Library of Congress,

and a non-sovereign sue-and-be-sued instrumentality,

such as the Postal Service. The Court stated that in

Shaw, “the starting point for our analysis was the ‘no-

interest rule,’ which is to the effect that, absent express

consent by Congress, the United States is immune from

interest awards . . . The dispositive question was

. . . whether Title VII contained an express waiver of

the Library of Congress’ immunity from interest.”

Loeffler, 486 U.S. at 565 (citation omitted). It did not.

However, It he no- interest rule is . . . inapplicable

where the Government has cast off the cloak of sover-

eignty and assumed the status of a private commercial

enterprise. Id. (quoting Shaw, 478 U.S. at 317 n.5).

“In creating the Postal Service, Congress [cast off the

cloak of sovereignty], and therefore, the no-interest

rule does not apply to it.” Jd.

In 1994, the Court returned to the sue-and-be-sued

issue in Meyer, 510 U.S. 471, 114 S. Ct. 996, 127

L. Ed.2d 308. There, the plaintiff prevailed at trial in a

Bivens’ action against the Federal Savings and Loan

Insurance Corporation (FSLIC), which was a federal

sue- and- be- sued instrumentality. After the FDIC, the

successor in interest to the FSLIC, appealed unsuccess-

fully, the Supreme Court granted certiorari. Id. at 473-

75. In rejecting the FDIC’s argument that the FSLIC

enjoyed sovereign immunity, the Court reiterated that

“sue-and-be-sued waivers are to be ‘liberally’ construed

. notwithstanding the general rule that waivers of

sovereign immunity are to be read narrowly in favor of

the sovereign.” Jd. at 480 (citation omitted). Further,

the fact that Bivens actions were not generally avail-

able against private corporations was not controlling.

We [have] looked to the liability of a private enter-

prise as a floor below which [a sue-and-be-sued]

agency’s liability could not fall,” not a ceiling that may

not be exceeded. Id. at 482-83 (emphasis omitted).

Thus, the waiver of the FSLIC’s immunity included

federal constitutional torts. Jd. at 483. The Court went

on to hold, however, that Bivens actions could not be

filed against federal agencies, only against federal offi-

cers. Id. at 484-86.

Relying on Franchise Tax Board, Loeffler, and

Meyer, Flamingo argues that the Postal Service’s

waiver of immunity reaches federal antitrust actions.

We agree. In Franchise Tax Board, the Court held

that the general liberal-construction rule can be over-

come only if the Postal Service makes a clear showing

that the type of suit filed against it is not consistent

with the statutory or constitutional scheme, an implied

restriction is necessary to avoid “grave interference

2 Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91

S. Ct. 1999, 29 L. Ed. 2d 619 (1971) (recognizing an implied cause of

action against federal officials who violate the Constitution).

with the performance of a governmental function,” or

Congress plainly intended to use “sue and be sued” in a

narrow sense. Franchise Tax Bd., 467 U.S. at 517-18

(quoting Burr, 309 U.S. at 245); accord Loeffler, 486

U.S. at 554-55. Here, the Postal Service does not “at-

tempt to make the ‘clear’ showing of congressional pur-

pose necessary to overcome the presumption that im-

munity [from federal antitrust actions] has been

waived.” Meyer, 510 U.S. at 481. Further, it is doubtful

the Postal Service could make that showing: As was

the case in Loeffler, “since Congress expressly included

several narrow and specific limitations on the operation

of the [Postal Service’s] sue-and-be-sued clause, see 39

U.S.C. § 409, none of which is applicable here, the natu-

ral inference is that it did not intend other limitations to

be implied.” Loeffler, 486 U.S. at 557 (footnote omit-

ted).

Having determined that Congress has waived the

Postal Service’s immunity, we turn to the second in-

quiry, “whether the source of substantive law upon

which the claimant relies provides an avenue for relief.”

Meyer, 510 U.S. at 484. The source of substantive law

upon which Flamingo relies is federal antitrust law.

The Postal Service argues that a federal antitrust claim

may not be pursued against it because it is not a “per-

son” within the meaning of that law. We disagree. Al-

though a federal sovereign is not a “person,” the Postal

Service is not a sovereign.

The rule that the federal government and its instru-

mentalities are not “persons” for federal antitrust law

purposes dates back to United States v. Cooper Corp.,

312 U.S. 600, 61 S. Ct. 742, 85 L.Ed. 1071 (1941). In

Cooper, the federal government attempted to bring a

civil suit under the Sherman Act. The Court rejected

the suit, holding that the Sherman Act only allowed

“persons” to bring civil suits and the United States did

not meet the definition of a “person” under the Act. Id.

at 604, 614. The Court explained that, “in common us-

age, the term ‘person’ does not include the sovereign,

[and] statutes employing the phrase are ordinarily con-

strued to exclude it.” Id. at 604. Although “there is no

hard and fast rule of exclusion” of the sovereign from

the word “person,” id. at 604-05, the Court was con-

cerned because the Sherman Act used the word “per-

son” to describe both who could bring suit and who

could be sued. The Court wanted to avoid interpreting

“person” in a manner in which the United States could

be sued. Id. at 606. Hence, the Court reasoned that

“(t]he more natural inference . . . is that the meaning

of the word was in both uses limited to what are usually

known as natural and artificial persons, that is, indi-

viduals and corporations.” Id.

Later circuit court decisions extended Cooper to ex-

clude federal instrumentalities from the meaning of the

word “person” in federal antitrust laws. In the seminal

case of Sea-Land Service, Inc. v. Alaska Railroad, 659

F.2d 243, 244 (D.C. Cir. 1981), then-Judge Ginsburg

wrote for the court in holding that “Congress did not

place the United States or its instrumentalities under

the governance of the Sherman Act.” The Sea-Land

Service opinion relied on Cooper, and on Congress’s de-

cision after Cooper to amend some of the federal anti-

trust laws to allow the United States to bring civil ac-

tions for single, but not treble, damages. Id. at 245-46.

This, the court reasoned, represented a Congressional

intent to leave the word “persons” as the Cooper Court

had defined it. Jd. at 246.

10a

In Sakamoto v. Duty Free Shoppers, Ltd., 764 F.2d

1285, 1288-89 (9th Cir. 1985), we applied Sea-Land

Service and held that federal instrumentalities are im-

mune from antitrust liability. Because the defendant

government of Guam was “an instrumentality of the

federal government,” we held “[t]here is no reason why

Guam should enjoy less immunity than the federal gov-

ernment itself.” Id. at 1289 (citing Jet Courier Servs.,

Inc. v. Fed. Reserve Bank of Atlanta, 713 F.2d 1221,

1228 (6th Cir. 1983), and Sea-Land Serv., 659 F.2d at

246-47).

Cooper, Sea-Land Service, and Sakamoto remain

valid precedent, but they do not control our decision to-

day. These holdings require (or assume) that the fed-

eral instrumentality at issue enjoys federal sover-

eignty. As the Second Circuit recently explained:

“(While the Sea-Land court’s holding that the Sher-

man Act does not expose federal agencies to legal or

equitable liability for alleged antitrust violations . . .

is uncontroversial, such immunity was founded on the

sovereign immunity of the United States.” Name.-

Space, Inc. v. Network Solutions, Inc., 202 F.3d 573,

580-81 (2d Cir. 2000) (eitation omitted). Here, the

postal Service does not enjoy federal sovereignty.

The Postal Service’s sue- and- be- sued waiver of im-

munity has ereated a presumption that the eloak of sov-

ereignty has been withdrawn and that the Postal Serv-

ice should be treated as a private corporation. See

Franchise Tax Board, 467 U.S. at 520 ([Wie must pre-

sume that the Service’s liability is the same as that of

any other business.“); accord Loeffler, 486 U.S. at 556

(“Congress has cast off the Service’s ‘cloak of sover-

eignty’ and given it the ‘status of a private commercial

enterprise.’”) (quoting Shaw, 478 US. at 317 n.5.); see

lla

also Meyer, 510 U.S. at 482 (the Court has “looked to

the liability of a private enterprise as a floor below

which the [sue-and-be-sued] agency’s liability could not

fall.”). Because the Postal Service is an entity with the

status of a private commercial enterprise, it fits within

the common meaning of the word “person,” just as does

any other private corporation. See 15 U.S.C. § 7 (“The

word ‘person,’ or ‘persons,’ wherever used in [Title 15 of

the United States Code] shall be deemed to include

corporations . . . .”); see also Vt. Agency of Natural

Res. v. United States ex rel. Stevens, 529 U.S. 765, 782,

120 S. Ct. 1858, 146 L. Ed. 2d 836 (2000) (“(Tjhe pre-

sumption with regard to corporations is just the oppo-

site of the one governing [sovereigns]: they are pre-

sumptively covered by the term ‘person’ . . . .”) (citing

1 U.S.C. § 1) (emphasis omitted).

We find support for our conclusion in Gluval Mail

Ltd. v. United States Postal Service, 142 F.3d 208, 216-

17 (4th Cir. 1998). There, the Fourth Circuit held that

the Postal Service was a “person” that could be sued

under the Lanham Act. The court explained:

[T]he Lanham Act itself contains no waiver of sov-

ereign immunity for the federal government, and

. . . the Act’s definition of ‘person’ as an ‘organiza-

tion capable of being sued’ falls short of the standard

of explicitness required for such a waiver. But those

agencies whose immunity has already been waived,

and are capable of suing and being sued, fall

squarely within the plain language of the Lanham

3 Since Global Mail was decided, the Lanham Act was

amended to expressly cover the United States and its instrumen-

talities as “persons.” See Pub.L. No. 106-43, §§ 4(c), 6(b), 113 Stat.

219, 220 (1999) (codified at 15 U.S.C. § 1127).

12a

Act’s definition of juristie persons.’ . . . [A] gov-

ernmental agency engaged in a commercial enter-

prise, as is USPS, is indistinguishable in kind from a

private ‘firm’ or ‘association.’

Id. at 216; accord Fed. Express Corp. v. United States

Postal Serv., 151 F.3d 536, 544-46 (6th Cir. 1998);

United States v. Int! Courier, Inc., 131 F.3d 770, 775

(8th Cir. 1997). This reasoning applies equally here,

where federal antitrust law defines “person” as includ-

ing any private corporation, see 15 U.S.C. § 7, and

where Supreme Court precedent establishes that the

Postal Service is to be treated as a private corporation.

See Loeffler, 486 U.S. at 556.

The Postal Service cites several cases involving sue-

and-be-sued instrumentalities where such entities were

held exempt from federal antitrust laws. See Jet Cou-

rier Servs., 713 F.2d at 1228-29; E. N. Wiggins Airways,

Inc. v. Mass. Port Auth., 362 F.2d 52, 56 (Ist Cir. 1966);

Webster County Coal Corp. v. Tenn. Valley Auth., 476

F. Supp. 529, 531-32 (W. D. Ky. 1979). These cases pre-

date the Supreme Court’s decisions in Franchise Tax

Board, Loeffler, and Meyer and are not persuasive

4 The Postal Service points out that Global Mail holds that

Lanham Act claims, which are federal tort claims, may be brought

against the Postal Service. According to the Postal Service, this is

contrary to the law of this circuit under Pereira v. United States

Postal Serv., 964 F.2d 873 (9th Cir. 1992). In Pereira, we held that

the Postal Service is immune from suit for federal torts because

the sue-and-be-sued clause is limited by the Federai Tort Claims

Act (FTCA). Id. at 876-77. However, subsequent to Pereira, the

Supreme Court held that the FTCA does not limit a sue-and-be-

sued waiver as to federal tort claims because the FTCA only ap-

plies to state tort claims. Meyer, 510 U.S. at 476-79. This over-

ruled Pereira.

13a

authority in light of the Court’s recent sue- and-be- sued

jurisprudence.

We hold that the Postal Service can be sued under

federal antitrust laws because Congress has stripped

the Postal Service of its sovereign status by launching

it into the commercial world as a sue-and-be-sued entity

akin to a private corporation. However, we add one

significant caveat. Two types of immunity from federal

antitrust laws exist. Our discussion has focused solely

on the first kind of immunity—”status-based” immu-

nity, see Name.Space, 202 F.3d at 581—because the

parties only raise that type of immunity. A second type

of immunity—”conduct-based” immunity—can apply

when an entity does not enjoy status-based immunity,

but acts at the direction of a federal sovereign. See d.

at 581-82 (holding that a nonsovereign contractor en-

joyed immunity from antitrust law wherc it was exer-

cising a Congressionally-mandated monopoly). Ac-

cordingly, our holding that the Postal Service does not

enjoy status-based immunity does not prevent the

Service from asserting conduct-based immunity if the

action of the Postal Service being challenged was taken

at the command of Congress. See generally Air Cou-

rier Conf. v. Am. Postal Workers Union, 498 U.S. 517,

519, 111 S. Ct. 913, 112 L. Ed. 2d 1125 (1991) (recogniz-

ing that Congress has conferred a legal monopoly on

the Postal Service over mail delivery in and from the

United States).

THE PROCUREMENT MANUAL CLAIM

The Postal Serv ce argues that the district court

lacked jurisdiction over Flamingo’s claim that it vio-

lated the Postal Service Procurement Manual because

Flamingo lacks standing to assert the claim. The par-

14a

ties’ briefs devote much energy to an inconsistent se-

ries of cases from the 1970’s to the 1990’s discussing

this issue. We need not attempt to reconcile these

cases; they are irrelevant.

In 1996, Congress amended 28 U.S.C. § 1491, part of

the codification of the Tucker Act, by enacting the Ad-

ministrative Dispute Resolution Act of 1996 (“ADRA”),

Pub. L. No. 104-320, 110 Stat. 3870 (1996). The relevant

portion of the ADRA, as codified, reads:

Both the Unite[d] States Court of Federal Claims

and the district courts of the United States shall

have jurisdiction to render judgment on an action by

an interested party objecting to a solicitation by a

Federal agency for bids or proposals for a proposed

contract or to a proposed award or the award of a

contract or any alleged violation of statute or regu-

lation in connection with a procurement or a pro-

posed procurement. Both the United States Court

of Federal Claims and the district courts of the

United States shall have jurisdiction to entertain

such an action without regard to whether suit is in-

stituted before or after the contract is awarded.

28 U.S.C. § 1491(b)(1). A sunset provision in the ADRA

terminated district court jurisdiction under § 1491(b)(1)

on January 1, 2001; however, a savings provision states

that the termination of jurisdiction “shall not affect the

jurisdiction of a court of the United States to continue

with any proceeding that is pending before the court on

December 31, 2000.” ADRA, Pub. L. 104-320, § 12(d)-

(e). Flamingo is within this savings clause because it

filed its action on July 11, 2000. This being so, the

questions presented are whether § 1491(b)(1) applies to

the Postal Service, and if so, whether Flamingo has

15a

standing to assert the Procurement Manual claim. At

our request, the parties addressed these questions at

oral argument.

Having considered the parties’ arguments, we hold

that § 1491(b)(1) applies to the Postal Service. In

Emery Worldwide Airlines, Inc. v. United States, 264

F.3d 1071, 1080-83 (Fed. Cir. 2001), the Federal Circuit

held that the Postal Service could be sued under

§ 1491(b)(1). The court explained that, although Title

28 of the United States Code does not define “federal

agency,” it does define “agency” in a manner that cov-

ers the Postal Service. Emery Worldwide Airlines, 264

F.3d at 1080-81 (citing 28 U.S.C. § 451 and 39 U.S.C.

§ 201). We agree with the reasoning of Emery World-

wide Airlines, and follow its holding.

We also hold that Flamingo has standing under

§ 1491(b)(1) to assert its Procurement Manual claim.

Section 1491(b)(1) provides for district court jurisdic-

tion over any claim by an “interested party objecting to

a solicitation by a Federal agency for bids or proposals

for a proposed contract or to a proposed award or the

award of a contract or any alleged violation of statute or

regulation in connection with a procurement or a pro-

posed procurement.” Flamingo alleges that the Postal

6 28 U.S.C. § 1491(b)(4) imports Administrative Procedures Act

(APA) standards of review into procurement cases under 28 U.S.C.

§ 1491(b)(1). 39 U.S.C. § 410(a) exempts the Postal Service from

most of the APA. In Emery Worldwide Airlines, the court noted

the possibility that 28 U.S.C. § 1491(b)(4) and 39 U.S.C. § 410(a)

are in conflict, although the court avoided deciding the issue. See

Emery Worldwide Airlines, 264 F.3d at 1084-85. We do not see a

conflict. 28 U.S.C. § 1491(b)(4) incorporates by reference the APA

review standards into cases under 28 U.S.C. § 1491(b)(1); 28 U.S.C.

§ 1491(b)(4) does not create APA liability.

16a

Service violated its Procurement Manual by maintain-

ing contracts with Mexican suppliers of mail sacks that

violated the Manual while unfairly canceling a pro-

curement contract with Flamingo. Flamingo also al-

leges that the Postal Service violated the Manual by

falsely declaring an emergency in the supply of mail

sacks and failing to document this emergency so as to

be able to award no-bid contracts to Mexican suppliers.

Flamingo has standing under 28 U.S.C. § 1491(b)(1).

III

THE IMPLIED COVENANT CLAIM

The district court held that it lacked jurisdiction over

Flamingo’s claim for an alleged violation of the implied

covenant of good faith and fair dealing because that

claim was an unexhausted tort claim barred under the

Federal Tort Claims Act (FTCA), 28 U.S.C. §§ 1346(b),

2671-2680. The FTCA applies to the Postal Service, see

39 U.S.C. § 409(c), and Flamingo has never disputed

that the claim is a tort claim covered by the FTCA.

Under the FTCA, the claim had to be administratively

exhausted for the court to have subject matter jurisdic-

tion. Jerves v. United States, 966 F.2d 517, 518-19 (9th

Cir. 1992); see 28 U.S.C. § 2675(a).

In determining that the claim was unexhausted, the

district court considered a declaration submitted by the

Postal Service and took note of Flamingo’s failure to

proffer contrary evidence. We therefore treat the

court’s dismissal of the claim as a grant of summary

judgment, which we review de novo. Lopez v. Smith,

203 F.3d 1122, 1131 (9th Cir. 2000) (en banc).

The declaration submitted to the district court by the

Postal Service demonstrated that Flamingo had not

met the exhaustion requirement of the FTCA. Fla-

17a

mingo failed to present any evidence contradicting this

declaration. We affirm the district court’s dismissal of

the claim.

THE CALIFORNIA BUSINESS & PROFESSIONS

CODE § 17200 CLAIM

The Postal Service argues that the district court

lacked supplemental jurisdiction over the California

Business & Professions Code § 17200 claim and, alter-

natively, that the claim is preempted by federal law.

We do not reach the issue of supplemental jurisdiction

because we hold that the district court properly exer-

cised original jurisdiction over this claim under 39

U.S.C. § 409(a). Nonetheless, the claim was properly

dismissed because it is preempted by federal law.

We first consider the district court’s jurisdiction.

Subject to certain inapplicable exceptions, 39 U.S.C.

§ 409(a) provides that “the United States district courts

shall have original but not exclusive jurisdiction over all

actions brought by or against the Postal Service.” The

plain language of this statute grants United States dis-

trict courts original jurisdiction over lawsuits by or

against the Postal Service, as other circuits have held.

E. g. Licata v. United States Postal Serv., 33 F.3d 259,

260-62 (3d Cir. 1994); Cont’l Cablevision of St. Paul,

Inc. v. United States Postal Serv., 945 F.2d 1434, 1437-

41 (8th Cir. 1991); Am. Postal Workers Union v. United

States Postal Serv., 830 F.2d 294, 312 n.33 (D.C. Cir.

1987).

We would stop our discussion here, except for the

need to clarify an arguable inconsistency in our cases

interpreting 39 U.S.C. § 409(a). In Janakes v. United

18a

States Postal Service, 768 F.2d 1091, 1093 (9th Cir.

1985), we quoted and adopted the Seventh Circuit’s

holding in Peoples Gas, Light & Coke Co. v. United

States Postal Service, 658 F.2d 1182, 1189 (7th Cir.

1981), that § 409(a) “does not confer subject matter ju-

risdiction for actions in which the [Postal] Service is a

party, but requires a ‘substantive legal framework’ of

federal law to confer federal subject matter jurisdic-

tion.” According to Peoples Gas and Janakes, § 409(a)

“merely removes the barriers of sovereign immunity.”

Id. Later, without citing Janakes, we held in Wright v.

United States Postal Service, 29 F.3d 1426, 1430 (9th

Cir. 1994), that “39 U.S.C. § 409(a) . . . grants the dis-

trict courts original but not exclusive jurisdiction over

actions by or against the USPS.” See also Silver v.

United States Postal Serv., 951 F.2d 1033, 1035 & n.1

(9th Cir. 1991) (per curiam) (citing without discussion

§ 409(a) as a basis for jurisdiction).

A careful reading of our cases reveals that no true in-

consistency exists because Janakes is distinguishable.

In Janakes, the issue we decided was whether § 409(a)

created a substantive right to bring suit. See Janakes,

768 F.2d at 1093. We held it did not. Id. Although

some language in Janakes suggests that § 409(a) does

not confer subject matter jurisdiction, that language is

dicta. Indeed, the Seventh Circuit, which in Peoples

Gas created the decision that prompted our Janakes

language, later adopted a reading of Peoples Gas con-

sistent with the reading we now apply to Janakes. See

Powers v. United States Postal Serv., 671 F.2d 1041,

1042 (7th Cir. 1982). We are satisfied that our reading,

following Wright, is correct. The plain language of

§ 409(a) states that the district courts “shall have

original jurisdietion“ the same words used to grant

19a

jurisdiction elsewhere in the United States Code. E

28 U.S.C. §§ 1331, 1332. liens

We hold that the district court correctly exercised

original subject matter jurisdiction under 39 U.S.C.

8 409(a) over Flamingo’s claim asserted under Cali-

fornia Business & Professions Code § 17200.

The district court’s dismissal of the California Busi-

ness & Professions Code § 17200 claim was proper,

however, because that claim is preempted by federal

law. The district court did not reach this issue, but we

may affirm on any ground supported by the record. See

— v. Calderon, 224 F.3d 972, 981 n. 7 (9th Cir.

Preemption comes in several forms. Here we are

concerned with conflict preemption, by which “state law

is preempted to the extent that it actually conflicts with

federal law. Such a conflict arises when ‘compliance

with both federal and state regulations is a physical im-

possibility,’ . . . „or where state law ‘stands as an ob-

stacle to the accomplishment and execution of the full

purposes and objectives of Congress.’” Pac. Gas &

Elec. Co. v. State Energy Res. Conservation & Dev.

Comm n, 461 U.S. 190, 204, 103 S. Ct. 1713, 75 L. Ed. 2d

752 (1983) (quoting Florida Lime & Avocado Growers,

Inc. v. Paul, 373 U.S. 132, 142-43, 83 S. Ct. 1210, 10

L. Ed. 2d 248 (1963), and Hines v. Davidowitz, 312 U.S.

52, 67, 61 S. Ct. 399, 85 L. Ed. 581 (1941)).

The state law at issue, California Business & Profes-

sions Code § 17200, is a notoriously broad statute. It

applies to, among other things, “any unlawful, unfair or

fraudulent business act or practice.” Here, Flamingo is

using the section to challenge procurement decisions

20a

made by the Postal Service involving the Postal Serv-

ice’s requirements for mail bags. This use of section

17200 conflicts with federal law.

The Postal Service is expressly authorized by 39

U.S.C. § 401(3) to determine the character and neces-

sity of its expenditures. And, although 28 U.S.C.

§ 1491(b)(1) allows for challenges to Postal Service pro-

curement decisions, 28 U.S.C. § 1491(b)(4) provides that

such decisions may only be invalidated by a federal

court applying the deferential APA standard of review

codified at 5 U.S.C. § 706 (for example, if the procure-

ment decision is arbitrary and capricious). Allowing the

requirements of California Business & Professions

Code § 17200 to control the Postal Service’s procure-

ment decisions would impinge upon the Service’s right

to control the character and necessity of its purchases

free from state constraint, and would negate the defer-

ential standard Congress has created for federal court

review of such decisions. Cf. United States v. City of

Pittsburg, Cal., 661 F.2d 783, 785-86 (9th Cir. 1981)

(holding that a local ordinance requiring letter carriers

to obtain consent before crossing lawns was preempted

by a Postal Service regulation allowing mail carriers to

cross lawns unless the owner objects because of the

clear conflict between the two provisions). Flamingo’s

claim asserted under California Business & Professions

Code § 17200 is preempted by federal law.

THE § 1983 CLAIM

The Postal Service argues that we should dismiss

Flamingo’s 42 U.S.C. § 1983 claim for failure to state a

claim upon which relief can be granted. We agree. The

Postal Service acts under federal law, and § 1983 does

not allow for a suit based upon actions taken under

21a

color of federal law. Billings v. United States, 57 F.3d

797, 801 (9th Cir. 1995). Exercising our authority to af-

firm on any ground supported by the record, we dismiss

with prejudice the § 1983 claim.

VENUE

The district court, after dismissing the federal anti-

trust claims and the breach of implied covenant claim,

dismissed the Procurement Manual, California Business

and Professions Code § 17200, and 42 U.S.C. § 1983

claims for improper venue. It held that 15 U.S.C. § 22

did not support venue for these claims once the anti-

trust claims were dismissed.

Section 22 states:

Any suit, action, or proceeding under the antitrust

laws against a corporation may be brought not only

in the judicial district whereof it is an inhabitant,

but also in any district wherein it may be found or

transacts business; and all process in such cases may

be served in the district of which it is an inhabitant,

or wherever it may be found.

15 U.S.C. § 22 (emphasis added).

We have held earlier in this opinion that the district

court erred in dismissing the antitrust claims on the

ground of sovereign immunity. We now hold that un-

der 15 U.S.C. § 22, venue for the antitrust claims was

proper in the Northern District of California because

the Postal Service may be found in, and transacts busi-

ness in, that district. See id.

Because venue is proper in the Northern District of

California for the antitrust claims, and because the Pro-

curement Manual, § 17200, and § 1983 claims arise out

22a

of the same common nucleus of facts, venue in the

Northern District was proper for these claims as well.

See Beattie v. United States, 756 F.2d 91, 100-104 (D.C.

Cir. 1984), overruled on other grounds in Smith v.

United States, 507 U.S. 197, 113 S. Ct. 1178, 122 L. Ed.

2d 548 (1993); Seattle Audubon Soc’y v. Lyons, 871 F.

Supp. 1286, 1290 (W.D. Wash. 1994). However, for al-

ternative reasons previously discussed, we have af-

firmed the dismissal of the § 17200 and § 1983 claims.

We now reverse the district court’s dismissal of the

Procurement Manual claim for improper venue.

VII

CONCLUSION

We reverse the district court’s dismissal of Fla-

mingo’s antitrust claims and Procurement Manual

claim. We affirm the district court’s dismissal of Fla-

mingo’s claim for breach of the implied covenant of good

faith and fair dealing, and its dismissal of the claims as-

serted under California Business & Professions Code

§ 17200 and 42 U.S.C. § 1983. The parties shall each

bear their respective costs for this appeal.

AFFIRMED in part, REVERSED in part, and RE-

MANDED for further proceedings consistent with this

opinion.

23a

APPENDIX B

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

Civil Action No. C 00-2484 MMC

FLAMINGO INDUSTRIES (U.S. A), LTD.,

AND ARTHUR WAN, PLAINTIFFS

U.S. POSTAL SERVICE, ET AL., DEFENDANTS

Filed: March 19, 2001]

ORDER GRANTING DEFENDANT'S MOTION TO

DISMISS; VACATING HEARING

Before the Court is defendant United States Postal

Service’s motion to dismiss or, in the alternative, for

summary judgment. Having considered the papers

submitted in support of and in opposition to the motion,

the Court deems the matter appropriate for decision on

the papers, VACATES the hearing scheduled for March

16, 2000 and rules as follows.

A. Antitrust Claims

Defendant argues plaintiffs cannot state a claim

against it under the antitrust laws. Federal instru-

mentalities are not liable under the antitrust laws. See

Sakamoto v. Duty Free Shoppers, Ltd., 764 F.2d 1285,

24a

1288 (9th Cir. 1985); Sea-Land Service, Inc. v. Alaska

Railroad, 659 F.2d 243, 246 (D.C. Cir. 1981), cert.

denied, 455 U.S. 919 (1982). Defendant is an instru-

mentality of the federal government. See Silver v.

United States Postal Service, 951 F.2d 1033, 1035 (9th

Cir. 1991). While the “sue and be sued” clause set

forth in 39 U.S.C. § 401(1) constitutes a general waiver

of sovereign immunity, see Pereira v. United States

Postal Service, 964 F.2d 873, 876 (9th Cir. 1992), such

language cannot serve to subject defendant to liability

under the antitrust laws as “there was no attempt on

the part of Congress to impose liability in the first

place.” See E.W. Wiggins Airways, Inc. v. Massachu-

setts Port Authority, 362 F.2d 52, 56 (1st Cir.), cert.

denied, 385 U.S. 947 (1966) (holding “sue and be sued”

clause in statute creating Massachusetts Port Author-

ity did not subject it to antitrust laws). Accordingly,

defendant’s motion to dismiss Counts One through Five

(antitrust claims) for failure to state a claim is hereby

GRANTED.

B. Non-Antitrust Claims

With respect to the non-antitrust claims, defendant

raises challenges under Rules 12(b)(1), 12(b)(3), 12(b)(6)

and 56 of the Federal Rules of Civil Procedure. The

Court will consider the jurisdictional and venue chal-

lenges under Rules 12(b)(1) and 12(b)(3), respectively,

before addressing the merits of plaintiffs claims under

Rules 12(b)(6) and 56. See Arrowsmith v. United Press

Int'l, 320 F.2d 219, 221 (2nd Cir. 1963) (holding district

court erred in dismissing action for failure to state a

claim prior to addressing issues of jurisdiction and

venue).

25a

1. Jurisdiction

Defendant does not challenge the Court’s jurisdiction

as to Count Nine (42 U.S.C. § 1983). Defendant doe=

challenge the Court’s jurisdiction as to Counts Six

(California Business & Professions Code § 17200),

Seven (violation of procurement manual), and Eight

(breach of implied covenant of good faith and fair

dealing).

The Court has jurisdiction over Counts Six and

Seven. See 39 U.S.C. § 409(a) (providing district courts

with original jurisdiction over all actions brought by or

against the Postal Service); Franchise Tax Board v.

United States Postal Service, 467 U.S. 512, 514-515

(1984) (addressing claim brought against Postal Service

under state tax laws, where federal jurisdiction invoked

pursuant to § 409(a)). Accordingly, defendants’ motion

to dismiss Counts Six and Seven for lack of jurisdiction

is hereby DENIED.

With respect to Count Eight, defendant interprets

the claim as one by which plaintiffs seek tort remedies,

and plaintiffs make no argument to the contrary. The

Federal Torts Claim Act (“FTCA”) applies “to tort

claims arising out of the activities of the Postal

Service.” See 39 U.S.C. § 409(c). Exhaustion of admini-

strative remedies under the FTCA is a jurisdictional

prerequisite to suit. See Jerves v. United States, 966

F.2d 517, 518-519 (9th Cir. 1992). “A tort claimant may

not commence proceedings in court against the United

States without first filing [a] claim with the appropriate

federal agency and either receiving a conclusive denial

of the claim from the agency or waiting for six months

to elapse without a final disposition of the claim being

made.” Id. at 519. Plaintiffs have not alleged such

exhaustion, and leave to amend would be futile because

26a

plaintiffs do not dispute defendant’s evidence as to lack

of exhaustion, (see Eaves Decl. at II 2-4), and further

state “no claim was required to be submitted by the

plaintiffs.” (See Pls. Opp. at 14:19.) Accordingly, defen-

dant’s motion to dismiss Count Eight for lack of juris-

diction is hereby GRANTED.

2. Venue

As to the remaining non-antitrust claims, Counts Six,

Seven, and Nine, venue is proper in this district only if

plaintiffs establish that “a substantial part of the events

or omissions giving rise to the claim occurred” in the

Northern District of California. See 28 U.S.C.

§ 1391(e)(2).' In their opposition, plaintiffs do not dis-

cuss how they can establish venue under § 1391(e)(2),

and instead rely exclusively on 15 U.S.C. § 22, which

addresses venues for antitrust claims.’ Plaintiffs’

antitrust claims, however, have been dismissed.

Accordingly, defendant’s motion to dismiss Counts Six,

Seven, and Nine for improper venue is hereby

GRANTED.

Because defendant is a resident of the District of Columbia,

see 39 C.F.R. § 2.3, and plaintiffs allege they are residents of

Illinois, (see Compl. at II 2, 3), venue is not proper under either 28

U.S.C. § 1391(e)(1) or (e)(3).

2 Moreover, neither the allegations in the complaint nor the

evidence before the Court suggests venue is proper in this district

under § 1391(e). Plaintiffs challenge decisions made by defendant’s

agents in the District of Columbia, (see Wan Decl. Ex. A-H), speci-

fically, decisions to terminate Flamingo’s contracts with defendant

and to prevent Flamingo from prevailing on subsequent bids. (See,

e.g., Compl. at 11 16, 20-29.) Plaintiffs allege these decisions

violated the non-antitrust federal and state laws in question. (See

id. at 11 51-73).

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CONCLUSION

For the reasons stated, defendant’s motion to dismiss

in GRANTED.

The Clerk shall close the file.

IT IS SO ORDERED.

% MAXINE M. CHESNEY

MAXINE M. CHESNEY

United States District Judge

Dated: March 19, 2001

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APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 01-15963

D.C. No. C00-2484 MMC

FLAMINGO INDUSTRIES (USA) LTD. AND

ARTHUR WAH, PLAINTIFFS-APPELLANTS

UNITED STATES POSTAL SERVICE,

DEFENDANT-APPELLEE

[Filed: Nov. 4, 2002]

ORDER

Before: LAY,” THOMPSON, and TALLMAN, Circuit

Judges.

The panel, as constituted above, has unanimously

voted to deny appellee United States Postal Service’s

petition for rehearing. Judge Tallman has also voted to

deny its petition for rehearing by the court en banc, and

Judges Lay and Thompson have recommended that

that petition be denied.

The full court has been advised of the petition for

court rehearing en banc, and no judge of the court has

* The Honorable Donald P. Lay, Senior United States Circuit

Judge for the Eighth Circuit, sitting by designation.

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requested en banc rehearing. See Fed. R. App. P.

35(b).

The petitions for panel rehearing and for rehearing

by the court en banc are DENIED.

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APPENDIX D

1. 15 U.S.C. 7 provides:

§ 7. “Person” or “persons” defined

The word “person”, or “persons”, wherever used in

sections 1 to 7 of this title shall be deemed to include

corporations and associations existing under or author-

ized by the laws of either the United States, the laws of

any of the Territories, the laws of any State, or the laws

of any foreign country.

2. 15 U.S.C. 12(a) provides:

§ 12. Definitions; short title

(a) “Antitrust laws,” as used herein, includes the

Act entitled “An Act to protect trade and commerce

against unlawful restraints and monopolies,” approved

July second, eighteen hundred and ninety; sections sev-

enty-three to seventy-seven, inclusive, of an Act

entitled “An Act to reduce taxation, to provide revenue

for the Government, and for other purposes,” of August

twenty-seventh, eighteen hundred and ninety-four; an

Act entitled “An Act to amend sections seventy-three

and seventy-six of the Act of August twenty-seventh,

eighteen hundred and ninety-four, entitled ‘An Act to

reduce taxation, to provide revenue for the Govern-

ment, and for other purposes,” approved February

twelfth, nineteen hundred and thirteen; and also this

Act.

“Commerce,” as used herein, means trade or com-

merce among the several States and with foreign na-

tions, or between the District of Columbia or any Terri-

tory of the United States and any State, Territory, or

foreign nation, or between any insular possessions or

other places under the jurisdiction of the United States,

3la

or between any such possession or place and any State

or Territory of the United States or the District of Co-

lumbia or any foreign nation, or within the District of

Columbia or any Territory or any insular possession or

other place under the jurisdiction of the United States:

Provided, That nothing in this Act contained shall apply

to the Philippine Islands.

The word “person” or “persons” wherever used in

this Act shall be deemed to include corporations and

associations existing under or authorized by the laws of

either the United States, the laws of any of the Territo-

ries, the laws of any State, or the laws of any foreign

country.

* * * * *

3. 39 U.S.C. 101 provides:

§ 101. Postal policy

(a) The United States Postal Service shall be oper-

ated as a basic and fundamental service provided to the

people by the Government of the United States,

authorized by the Constitution, created by Act of Con-

gress, and supported by the people. The Postal Service

shall have as its basic function the obligation to provide

postal services to bind the Nation together through the

personal, educational, literary, and business correspon-

dence of the people. It shall provide prompt, reliable,

and efficient services to patrons in all areas and shall

render postal services to all communities. The costs of

establishing and maintaining the Postal Service shall

not be apportioned to impair the overall value of such

service to the people.

(b) The Postal Service shall provide a maximum de-

gree of effective and regular postal services to rural ar-

eas, communities, and small towns where post offices

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are not self-sustaining. No small post office shall be

closed solely for operating at a deficit, it being the spe-

cific intent of the Congress that effective postal serv-

ices be insured to residents of both urban and rural

communities.

and maintain compensation for its officers and employ-

ees comparable to the rates and types of compensation

paid in the private sector of the economy of the United

States. It shall place particular emphasis upon oppor-

tunities for career advancements of all officers and em-

ployees and the achievement of worthwhile and satis-

fying careers in the service of the United States.

(d) Postal rates shall be established to apportion the

costs of all postal operations to all users of the mail on a

fair and equitable basis.

(e) In determining all policies for postal services, the

Postal Service shall give the highest consideration to

the requirement for the most expeditious collection,

transportation, and delivery of important letter mail.

(f) In selecting modes of transportation, the Postal

Service shall give highest consideration to the prompt

and economical delivery of all mail and shall make a fair

and equitable distribution of mail business to carriers

providing similar modes of transportation services to

the Postal Service. Modern methods of transporting

mail by containerization and programs designed to

achieve overnight transportation to the destination of

important letter mail to all parts of the Nation shall be

a primary goal of postal operations.

(g) In planning and building new postal facilities, the

Postal Service shall emphasize the need for facilities

and equipment designed to create desirable working

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conditions for its officers and employees, a maximum

degree of convenience for efficient postal services,

proper access to existing and future air and surface

transportation facilities, and control of costs to the

Postal Service.

4. 39 U.S.C. 201 provides:

§ 201. United States Postal Service

There is established, as an independent establish-

ment of the executive branch of the Government of the

United States, the United States Postal Service.

5. 39 U.S.C. 401 provides:

§ 401. General powers of the Postal Service

The Postal Service shall have the following general

powers:

(1) to sue and be sued in its official name;

(2) to adopt, amend, and repeal such rules and

regulations as it deems necessary to accomplish the

objectives of this title;

(8) to enter into and perform contracts, execute

instruments, and determine the character of, and

necessity for, its expenditures;

(4) to determine and keep its own system of ac-

counts and the forms and contents of its contracts

and other business documents, except as otherwise

provided in this title;

(5) to acquire, in any lawful manner, such per-

sonal or real property, or any interest therein, as it

deems necessary or convenient in the transaction of

its business; to hold, maintain, sell, lease, or other-

wise dispose of such property or any interest

34a

therein; and to provide services in connection

therewith and charges therefor;

(6) to construct, operate, lease, and maintain

buildings, facilities, equipment, and other improve-

ments on any property owned or controlled by it, in-

cluding, without limitation, any property or interest

therein transferred to it under section 2002 of this

title;

(7) to accept gifts or donations of services or

property, real or personal, as it deems, necessary or

convenient in the transaction of its business;

(8) to settle and compromise claims by or against

it;

(9) to exercise, in the name of the United States,

the right of eminent domain for the furtherance of

its official purposes; and to have the priority of the

United States with respect to the payment of debts

out of bankrupt, insolvent, and decedents’ estates;

and

(10) to have all other powers incidental, neces-

sary, or appropriate to the carrying on of its func-

tions or the exercise of its specific powers.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.