RESPONDENT: Flamingo Industries (USA) Ltd., et al.
LOCATION: Pennsylvania General Assembly
DOCKET NO.: 02-1290
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Ninth Circuit
CITATION: 540 US 736 (2004)
GRANTED: May 27, 2003
ARGUED: Dec 01, 2003
DECIDED: Feb 25, 2004
Edwin S. Kneedler - argued the cause for Petitioner
Harold J. Krent - argued the cause for Respondents
Nicholas M. Fobe - for the Center for the Advancement of Capitalism as amicus curiae
Facts of the case
When the U.S. Postal Service ended its mail-sack contract with Flamingo Industries, Flamingo sued in U.S. district court. Flamingo claimed the Postal Service declared a "fake emergency in the supply of mail sacks" so it could give no-bid contracts to cheaper foreign manufacturers without allowing U.S. companies to compete for them. Flamingo claimed this violated federal antitrust laws (among other charges). The district court dismissed the antitrust claim reasoning that the federal government is protected by sovereign immunity. The Ninth Circuit Court of Appeals reversed on the antitrust immunity count. It ruled that the 1970 Postal Reorganization Act waived the Postal Service's sovereign immunity and that it could be sued under federal antitrust laws as a "person."
Can the U.S. Postal Service be sued under federal antitrust laws?
Media for United States Postal Service v. Flamingo Industries (USA), LimitedAudio Transcription for Oral Argument - December 01, 2003 in United States Postal Service v. Flamingo Industries (USA), Limited
Audio Transcription for Opinion Announcement - February 25, 2004 in United States Postal Service v. Flamingo Industries (USA), Limited
William H. Rehnquist:
The opinion of the Court in No. 02-1290, United States Postal Service versus Flamingo Industries will be announced by Justice Kennedy.
Anthony M. Kennedy:
This is a case that requires us to consider whether the United Sates Postal Service is subject to liability under the federal antitrust laws.
And in this case, the Postal Service is the petitionary in this Court and Flamingo Industries, which is a corporation, is the respondent.
At one time Flamingo had been making mail sacks for the Postal Service.
Its contract was terminated at which point the Flamingo sued the Postal Service alleging various violations.
The relevant one here is the allegation that there was a violation of the federal antitrust laws, specifically the Sherman Act.
In the United States District Court, the court dismissed the antitrust’s claims but the Court of Appeals for the Ninth Circuit reversed.
The Court of Appeals said the Postal Service is subject to antitrust liability on certain conditions.
We granted certiorari and we now hold the Postal Service is not subject to antitrust liability, so we reverse the Court of Appeals.
The Postal Service was created by an act that we refer to as PRA.
That is the Postal Reorganization Act of 1971.
The PRA makes the Postal Service an independent establishment of the Executive Branch of the Government of the United States, that is the statutory phrase an independent establishment of the Executive Branch of the Government of the United Sates.
In an earlier decision in this Court, which is entitled Meyer versus FDIC, we said there is a two-step inquiry in cases like this: the first is whether there is a waiver of sovereign immunity against an agency of the government.
If there is, we ask the second question which is whether the substantive prohibitions of the Act in question do in fact apply to an agency of the government.
As to the first step, the PRA does provide that the Postal Service can sue and be sued in its official name.
So, there is a waiver of immunity that makes the Postal Service generally amenable to suit.
Still, there is no liability if the substantive law in question is not intended to reach the federal entity so, we must proceed to that second step.
Our examination of the Sherman Act and our decisions interpreting it lead us to hold that the Postal Service is not subject to antitrust liability.
The Sherman Act applies to persons -- that is the phrase used in the Act -- but the Postal Service is not a person separate and apart from the United States.
Its designation as an independent establishment of the Executive Branch is not consistent with the idea that it is an entity existing outside the government.
Absent an expressed statement from the Congress that the Postal Service can be sued for antitrust violations despite its governmental status, the Postal Service is not subject to antitrust liability, our conclusion is consistent with the nationwide public responsibilities of the Postal Service which has different goals, obligations, and powers form private corporations, and nor thus the fact that the Postal Service has lines of business beyond the scope of its mail monopoly show it is separate from the government under the antitrust laws.
The Postal Service, in both form and function, is not a separate person from the United States.
It is part of the government and does not control by antitrust laws.
The judgment of the Court of Appeals is reversed and our opinion is unanimous.