Licata v. U.S. Postal Service

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
8-24-1994
Licata v. U.S. Postal Service
Precedential or Non-Precedential:
Docket 93-5637
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 93-5637
STEPHEN B. LICATA,
Appellant
v.
UNITED STATES POSTAL SERVICE
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civ. No. 93-cv-01386)
Argued May 5, 1994
Before: SLOVITER, Chief Judge, HUTCHINSON, Circuit Judge,
and DIAMOND,* District Judge
(Filed August 24, l994 )
Burtis W. Horner (Argued)
Stryker, Tams & Dill
Newark, NJ 07105
Attorney for Appellant
Michael Chertoff
United States Attorney
Susan H. Handler-Menahen (Argued)
Assistant United States Attorney
Newark, NJ 07102
Attorneys for Appellee
*
. Hon. Gustave Diamond, United States Senior District Judge for
the Western District of Pennsylvania, sitting by designation.
OPINION OF THE COURT
SLOVITER, Chief Judge.
Stephen Licata appeals the district court's dismissal
of his suit, which it treated as alleging a breach of contract,
against the United States Postal Service for lack of subject
matter jurisdiction. We conclude that we must reverse in light
of Congress's specific grant to the district courts of original
jurisdiction over such claims.
I.
FACTS AND PROCEDURAL HISTORY
Because the district court dismissed the complaint
under Federal Rule of Civil Procedure 12(b)(1) before the Postal
Service filed an answer, we review only whether the allegations
on the face of the complaint, taken as true, allege facts
sufficient to invoke the jurisdiction of the district court. See
Haydo v. Amerikohl Mining Inc., 830 F.2d 494, 495-96 (3d Cir.
1987); Cardio-Medical Assocs., Ltd. v. Crozer-Chester Medical
Ctr., 721 F.2d 68, 75 (3d Cir. 1983).
According to the complaint, the Postal Service has
established a program which encourages employee participation by
awarding 10% of the total economic benefit of any implemented
suggestion, up to a maximum award of $35,000. Licata, a
machinist employed by the Postal Service, submitted a suggestion
in July 1989 for a modified roller for one of the Service's
package sorters. Licata's suggestion was implemented at the
local level and research indicated that if implemented
nationwide, the modified roller could save the Service $500,000
in the first year. Although the modification was formally
disapproved for national implementation in June 1991, Licata
claims that the Service continued to authorize the manufacture
and use of the rollers without paying him his share of the
savings.
On March 31, 1993, Licata filed suit in the District
Court for the District of New Jersey seeking $35,000 damages, as
well as interest, costs, and attorney's fees. He alleged
jurisdiction under 39 U.S.C. § 409(a) (1988) and 28 U.S.C. § 1339
(1988). Both parties and the district court read the complaint
to allege some kind of common law breach of contract claim. App.
at 16 n.3, 73-74, 159. The Service filed a Motion to Dismiss or,
in the Alternative, for Summary Judgment prior to filing an
answer, arguing that the district court lacked subject matter
jurisdiction, that the complaint failed to state a claim upon
which relief could be granted, or that summary judgment should be
entered based on the affidavit and exhibits attached to the
motion.
The district court dismissed the complaint for lack of
subject matter jurisdiction, reasoning that section 409(a) was
insufficient to maintain jurisdiction without a cause of action,
and that if the claim sounded in contract it was barred by the
Tucker Act. See Licata v. United States Postal Serv., No.
Civ.A.93-1386, 1993 WL 388974, at *3-4 (D.N.J. Sept. 22, 1993).
This timely appeal followed. We exercise plenary review over
questions of subject matter jurisdiction. See Packard v.
Provident Nat'l Bank, 994 F.2d 1039, 1044 (3d Cir.), cert.
denied, 114 S. Ct. 440 (1993).1
II.
DISCUSSION
A.
Section 409 of the Postal Reorganization Act of 1970,
entitled "Suits by and against the Postal Service," provides:
(a) Except as provided in section 3628 of this title
[governing appeals of postal ratemaking], the United
States district courts shall have original but not
exclusive jurisdiction over all actions brought by or
against the Postal Service. Any action brought in a
State court to which the Postal Service is a party may
be removed to the appropriate United States district
court under the provisions of chapter 89 of title 28.
39 U.S.C. § 409(a) (1988).
When interpreting a statute we look first to its plain
meaning, and if the language is unambiguous no further inquiry is
necessary. See Sacred Heart Medical Ctr. v. Sullivan, 958 F.2d
537, 545 (3d Cir. 1992). The plain meaning of the first sentence
of section 409(a) grants the district court "jurisdiction" over
Licata's complaint, since it is an "action[] brought . . .
against the Postal Service" and does not fall within the
exception at the beginning of the sentence. Thus we agree with
the Eighth Circuit that the words of section 409(a) "are a clear
and unequivocal grant of jurisdiction to the district courts
1
. Because of our interpretation of section 409(a), we need not
address whether jurisdiction would be proper under 28 U.S.C. §
1339.
. . . [and that] the words of the first sentence of Section
409(a) convey a meaning as plain as any we can recall seeing."
Continental Cablevision v. United States Postal Serv., 945 F.2d
1434, 1437 (8th Cir. 1991). Indeed, we cannot imagine how
Congress could grant jurisdiction more plainly.
Nor is there anything in our precedents that prevents
us from attributing to section 409(a) its plain meaning. We have
described section 409(a) as a "general grant of jurisdiction to
the district courts," Air Courier Conference of America v. United
States Postal Serv., 959 F.2d 1213, 1217 n.2 (3d Cir. 1992), and,
consistent with the Supreme Court's approach, have had no qualms
about reviewing judgments against the Postal Service when
jurisdiction was predicated on section 409(a). See Franchise Tax
Bd. v. United States Postal Serv., 467 U.S. 512, 514 (1984)
(permitting suit against Postal Service for refusing to comply
with administrative order to withhold state taxes and noting
jurisdiction was predicated on § 409(a)); Pearlstine v. United
States, 649 F.2d 194, 195 n.2 (3d Cir. 1981) (reviewing district
court order on award of costs and attorney's fees against Postal
Service and noting jurisdiction was based on § 409(a)).
Indeed, most courts of appeals to consider the question
have found that section 409(a) is what it seems to be--a grant of
jurisdiction to the district courts for suits in which the Postal
Service is a party. See, e.g., Continental Cablevision, 945 F.2d
at 1437; American Postal Workers Union v. United States Postal
Serv., 830 F.2d 294, 313 n.33 (D.C. Cir. 1987); Insurance Co. of
North America v. United States Postal Serv., 675 F.2d 756, 757-58
(5th Cir. 1982); Kennedy Elec. Co. v. United States Postal Serv.,
508 F.2d 954, 955 (10th Cir. 1974); White v. Bloomberg, 501 F.2d
1379, 1384 n.6 (4th Cir. 1974); see also 2 Government Contracts §
8:226, at 153 (Thomas R. Trenker et al. eds., 1992) ("With
respect to contracts with the U.S. Postal Service, the Postal
Reorganization Act confers jurisdiction on the District
Courts."); 1 James Wm. Moore et al., Moore's Federal Practice ¶
0.62[7], at 700.7 (2d ed. 1994) ("Under § 409, the district court
has jurisdiction of actions by or against the Postal Service
whether or not they arise under the statutes affecting postal
matters, but this section by its terms applies only in cases in
which the Postal Service is a party." (footnote omitted)).
Despite the clear language and considerable precedent,
there is a split of authority in the circuits as to whether
section 409 provides an independent basis for subject matter
jurisdiction. See Hexamer v. Foreness, 981 F.2d 821, 823 (5th
Cir. 1993) (noting split).2 The Service relies primarily on
Peoples Gas, Light & Coke Co. v. United States Postal Service,
658 F.2d 1182, 1189 (7th Cir. 1981), which held that the purpose
of section 409(a) was "to remove any barrier that might otherwise
2
. The district courts of this circuit are also divided over the
meaning of section 409(a). Compare Hudak v. United States Postal
Serv., No. Civ.A.94-0007, 1994 WL 45134, at *1 (E.D. Pa.
Feb. 15, 1994) and Borough of Berlin v. United States, No.
Civ.A.93-1649(JEI), 1993 WL 172365, at *2 (D.N.J. May 20, 1993)
and Jones v. United States Postal Serv., No. Civ.A.89-399-CMW,
1990 WL 5198, at *2 (D. Del. Jan. 26, 1990) and Pearlstine v.
United States, 469 F. Supp. 1044, 1046 (E.D. Pa. 1979) with
Licata, 1993 WL 388974, at *3-4 and Tedesco v. United States
Postal Serv., 553 F. Supp. 1387, 1388 (W.D. Pa. 1983).
exist by reason of the doctrine of sovereign immunity. [It]
permit[s] the Postal Service, an independent executive
establishment created by Congress, to sue and to be sued."
Peoples Gas also stated that neither section 409(a) nor 28 U.S.C.
§ 1339 "provides an independent basis for jurisdiction. To each
of these provisions there must be added a substantive legal
framework to afford subject matter jurisdiction" and concluded
that section 409(a) "form[s] no basis for [such] a cause of
action." Id.; see also Janakes v. United States Postal Serv.,
768 F.2d 1091, 1093 (9th Cir. 1985) (adopting the holding of
Peoples Gas without discussion). We decline to follow Peoples
Gas, for we do not find its reasoning persuasive.
We believe the Postal Service conflates the issues of
subject matter jurisdiction, sovereign immunity, and a valid
cause of action. Section 409(a) does not speak to sovereign
immunity. It is 39 U.S.C. § 401(1) that waives the Service's
sovereign immunity by providing that it may "sue and be sued in
its official name." See Loeffler v. Frank, 486 U.S. 549, 556
(1988) ("By launching the Postal Service into the commercial
world, and including a sue-and-be-sued clause in its charter,
Congress has cast off the Service's cloak of sovereignty and
given it the status of a private commercial enterprise."
(quotations omitted)); Franchise Tax Bd, 467 U.S. at 517
(describing 39 U.S.C. § 401(1) as the "statutory waiver of
sovereign immunity" for the Postal Service).3
3
. Although we believe the statutory language alone is
sufficient to overcome the Service's argument, we note that the
Further, we believe that the Postal Service's argument,
relying on Peoples Gas, that subject matter jurisdiction is
absent without a cause of action is "seriously flawed" because
"whether or not 'a cause of action' exists goes to the merits,
not to the question of subject-matter jurisdiction." Continental
Cablevision, 945 F.2d at 1438. In the seminal case of Bell v.
Hood, 327 U.S. 678 (1946), the Supreme Court held that the
(..continued)
scant legislative history of this provision "refute[s] any
argument that a literal construction of [section 409(a)] is so
absurd or illogical that Congress could not have intended it."
Conroy v. Aniskoff, 113 S. Ct. 1562, 1566 (1993). Prior to the
Postal Reorganization Act of 1970, the Post Office Department was
a part of the President's cabinet. As Congress contemplated
altering its status to a government corporation, a number of
bills were circulated regarding postal reform and almost all
contained jurisdictional provisions similar to section 409(a) as
well as separate "sue and be sued" provisions. See H.R. 17070,
91st Cong., 2d Sess. §§ 111(1), 113(a) (1970); H.R. 4 [Rep. No.
91-988], 91st Cong., 2d Sess. §§ 205(2), 208(a) (1970); H.R.
11750, 91st Cong., 1st Sess. §§ 205(2), 208(a) (1969); see also
Bills to Improve and Modernize the Postal Service, to Reorganize
the Post Office Department, and for Other Purposes: Hearings on
H.R. 17070 and similar bills Before the House of Representatives
Comm. on Post Office and Civil Service, 91st Cong., 2d Sess. 64
(1970) (describing H.R. 17070, H.R. 4 and H.R. 11750 as
containing "procedures for suits to which the Postal Service is a
party" which were "[t]he same in substance"). The Committee
report accompanying H.R. 17070, the bill eventually passed,
reinforces our reading that section 409(a) grants federal courts
jurisdiction whenever the Postal Service is a party. See H.R.
Rep. No. 1104, 91st Cong., 2d Sess. 26 (1970), reprinted in 1970
U.S.C.C.A.N. 3649, 3674 ("This section details procedures for
suits to which the [Service] is a party. Subsection (a).--The
United States District Courts are given original nonexclusive
jurisdiction over suits by or against the Postal Service
. . . ."); see also H.R. Rep. No. 988, 91st Cong., 2d Sess. 29
(1970). The Conference Committee adopted this provision without
discussion. See H.R. Conf. Rep. No. 1363, 91st Cong., 2d Sess. 9
(1970). See generally Robert A. Saltzstein & Ronald E. Resh,
Postal Reform: Some Legal and Practical Considerations, 12 Wm. &
Mary L. Rev. 766, 766-69 (1971) (tracing history of the Postal
Reorganization Act).
district court erred in dismissing a complaint for want of
jurisdiction when it was in reality ruling on the viability of
the lawsuit. The Court held:
Jurisdiction, therefore, is not defeated as
respondents seem to contend, by the possibility that
the averments might fail to state a cause of action on
which petitioners could actually recover. For it is
well settled that the failure to state a proper cause
of action calls for a judgment on the merits and not
for a dismissal for want of jurisdiction. Whether the
complaint states a cause of action on which relief
could be granted is a question of law and just as
issues of fact it must be decided after and not before
the court has assumed jurisdiction over the
controversy. If the court does later exercise its
jurisdiction to determine that the allegations in the
complaint do not state a ground for relief, then
dismissal of the case would be on the merits, not for
want of jurisdiction.
Id. at 682. The fact that section 409(a) does not provide a
cause of action or that Licata will not prevail on the merits is
irrelevant to the district court's jurisdiction over the suit.
See Growth Horizons, Inc. v. Delaware County, 983 F.2d 1277,
1280-81 (3d Cir. 1993).4
Thus, after reviewing the language and history of the
statute, we hold that absent some other statutory bar, section
409(a) grants district courts subject matter jurisdiction over
actions to which the Postal Service is a party.
4
. Also irrelevant to the jurisdictional question is whether a
private right of action exists under the Postal Reorganization
Act, see Gaj v. United States Postal Serv., 800 F.2d 64, 68-69
(3d Cir. 1986), or whether the Administrative Procedures Act
applies to the Postal Service, see Air Courier Conference of
America v. American Postal Workers Union, 498 U.S. 517, 523 n.3
(1991), issues raised by the Postal Service on appeal.
B.
Nor do we agree with the district court's alternative
holding that the Tucker Act precludes subject matter jurisdiction
over this suit.
The Tucker Act is one of the few places in the federal
statutes which provides both jurisdiction and a waiver of
sovereign immunity for non-tort actions against the United States
and it generally requires recourse to the Court of Federal
Claims. See Bowen v. Massachusetts, 487 U.S. 879, 910 n.48
(1988); Hahn v. United States, 757 F.2d 581, 585-86 (3d Cir.
1985). Specifically, the "Big" Tucker Act grants the "Court of
Federal Claims . . . jurisdiction to render judgment upon any
claim against the United States founded . . . upon any express or
implied contract with the United States," 28 U.S.C. § 1491(a)(1)
(Supp. IV 1992), while the "Little" Tucker Act grants concurrent
jurisdiction to the district courts for such claims not exceeding
$10,000 in value, 28 U.S.C. § 1346(a)(2) (1988).5
However, it is well settled that a claim brought
against the Postal Service in its own name is not a claim against
the United States and thus is not governed by the Tucker Act.
See Continental Cablevision, 945 F.2d at 1440 ("This is . . . not
an action for damages against the United States, so the Tucker
Act does not apply. The Postal Service is a legal entity
separate from the United States itself." (parentheses omitted));
5
. The district court did not have jurisdiction over this suit
under the Little Tucker Act because Licata sought the sum of
$35,000 in his complaint.
Jackson v. United States Postal Serv., 799 F.2d 1018, 1022 (5th
Cir. 1986) ("the district courts enjoyed concurrent jurisdiction
over suits against the [Postal Service] in eo nomine for breach
of a [Postal Service] contract, regardless of the amount
involved"); White v. Bloomberg, 501 F.2d 1379, 1384 n.6 (4th Cir.
1974) ("a suit may be maintained against the Postal Service
without joining the United States as a party, and . . . the
district courts have jurisdiction over suits against the Postal
Service for amounts over $10,000"); Butz Eng'g Corp. v. United
States, 499 F.2d 619, 627-28 (Ct. Cl. 1974) ("the Postal Service
could always be sued in district court" on a contract claim); cf.
United States v. Connolly, 716 F.2d 882, 885 n.4 (Fed. Cir. 1983)
(in banc) ("Congress made it clear in the Postal Reorganization
Act of 1970 that the Postal Service was essentially to be
separate from the government. Indeed, the Act provides that the
Postal Service is empowered to sue and be sued in its own name,
39 U.S.C. § 401(1), and that the district courts have original
jurisdiction over virtually all such actions, 39 U.S.C. §
409(a)." (citations omitted)), cert. denied, 465 U.S. 1065
(1984).
The Federal Circuit, the court of appeals that probably
spends the most time mastering the intricacies of jurisdiction
under the Tucker Act, has noted the unusual position of the
Postal Service in that "in contradistinction to other federal
entities, [it] may sue and be sued on contract claims in courts
other than the Court of Federal Claims." Benderson Dev. Co. v.
United States Postal Serv., 998 F.2d 959, 962 (Fed. Cir. 1993)
(citing Pearlstine v. United States, 469 F. Supp. 1044, 1046
(E.D. Pa. 1979)). It concluded that the interaction between the
Tucker Act and section 409(a) was such that if a "dispute between
[plaintiff] and the Postal Service lies in contract, [then it
should] be resolved by the district court in the exercise of its
every-day jurisdiction over contract matters affecting the Postal
Service." Benderson Dev., 998 F.2d at 963. Thus, we conclude
that the Tucker Act does not deprive the district court of
jurisdiction over suits against the Postal Service.6
6
. In the course of the oral argument, the court sua sponte
raised the possibility that the Contract Disputes Act of 1978
(CDA), 41 U.S.C. §§ 601-13 (1988 & Supp. IV 1992), would bar the
district court's jurisdiction. Although we are free to reach
subject matter jurisdiction issues, and indeed are obliged to,
even if they were not considered by the district court, if it is
clear that the court lacked jurisdiction, this is not such a
case. In the first place, the parties did not raise nor did they
brief the applicability of the Contract Disputes Act. Therefore,
if the Service believes it appropriate, it is free to raise this
issue in the district court, or, of course, that court may raise
the issue sua sponte.
In the second place, the Contract Disputes Act's only
express limitation on district court jurisdiction is effected by
its amendment of the Little Tucker Act to withdraw the district
court's concurrent jurisdiction over those contract claims for
sums not exceeding $10,000 that would otherwise be subject to the
CDA. See 28 U.S.C. § 1346(a)(2). Two circuits, after careful
consideration, have held that where there is an independent basis
for district court jurisdiction (as there is for claims against
the Postal Service), both the Contract Disputes Act and the
Tucker Act are irrelevant. See In re Liberty Constr., 9 F.3d
800, 801-02 (9th Cir. 1993) (contract claims against the Small
Business Administration "may be entertained by the district
courts, regardless of the amount sought, so long as there exists
a basis for jurisdiction independent of the Tucker Act"); Marine
Coatings v. United States, 932 F.2d 1370, 1377 (11th Cir. 1991)
(although the CDA waives sovereign immunity "there is no need to
apply [the CDA] if another method of bringing suit is
available"); North Side Lumber Co. v. Block, 753 F.2d 1482, 1486
(9th Cir.) ("Because the proviso [added by the CDA] is an
It follows that we must reverse the district court's
Rule 12(b)(1) dismissal without precluding the Postal Service
from either raising new Rule 12(b)(1) objections if appropriate
on remand or proceeding to press its Rule 12(b)(6) motion. See
Fed. R. Civ. P. 12(b)(6). We caution that our decision rests
only on subject matter jurisdiction. We do not imply that we
have found Licata's claim viable, or that we have rejected the
Service's arguments that go to that issue.7
(..continued)
integral part of § 1346(a)(2), we conclude that it restricts only
the jurisdiction that is granted in the first part of §
1346(a)(2)."), cert. denied, 474 U.S. 931 (1985); see also 2
Government Contracts, supra, § 8:226, at 153 (plaintiff may chose
whether to file claim against Postal Service in district court or
under the CDA). But see Hayes v. United States Postal Serv., 859
F.2d 354, 356 (5th Cir. 1988) (CDA prohibits any district court
jurisdiction over contracts covered by the CDA); Jackson v.
United States Postal Serv., 799 F.2d 1018, 1022 (5th Cir. 1986)
(same). Indeed, in Hayes, 859 F.2d at 356-57, the Fifth Circuit
held that the CDA applied to a suggestion program claim by a
postal employee and thus that claim had to be pursued in the
Claims Court (now the Court of Federal Claims). However, in a
suit by the same postal employee, the Claims Court held that the
suggestion program was not a "procurement of services" and
therefore the CDA was inapplicable and there was no jurisdiction.
See Hayes v. United States, 20 Cl. Ct. 150, 153 (1990), aff'd
mem., 928 F.2d 411 (Fed. Cir. 1991). Of course, such a result
would not follow were we to agree with the Ninth and Eleventh
Circuits that the CDA is not exclusive.
7
. The Postal Service urges us to affirm the district court,
inter alia, because Licata's claim was an aspect of a collective-
bargaining agreement and therefore the complaint failed to state
a claim upon which relief could be granted. It appears that much
of its argument rests on affidavits and exhibits introduced in
the district court, as distinguished from the facts alleged in
the complaint. This would necessarily require a summary judgment
decision, something we are not prepared to rule on in the first
instance.
III.
CONCLUSION
For the foregoing reasons, we will reverse the order of
the district court dismissing plaintiff's suit for lack of
subject matter jurisdiction and remand for proceedings consistent
with this opinion.