Court Opinion

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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Precedential or Non-Precedential: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.