Court Opinion

ID: 9558720
Source: CourtListenerOpinion
Date Created: 2023-08-21 17:16:01.673438+00
Date Added: 2024-06-11T09:09:33.359206
License: Public Domain

TALLMAN, Circuit Judge,
dissenting in part:
The majority today circumvents express congressional intent to immunize the Postal Service from liability arising out of consequential damages claims for failure to deliver mail after M.B. Financial’s (M.B.) post office box was closed prematurely following M.B.’s submission of a check to renew the rental period. I respectfully dissent from part III A of the majority’s opinion. I otherwise concur in the result the majority reaches.
I
A
As a society, we have entered into a social contract with the federal govern*820ment. We pay taxes and receive certain services in return, some of which would never be provided unless the government steps in to correct what economists term a “market failure.” See U.S. Postal Serv. v. Council of Greenburgh Civic Ass’ns, 453 U.S. 114, 121, 101 S.Ct. 2676, 69 L.Ed.2d 517 (1981) (explaining that “[t]he Post Office played a vital yet largely unappreciated role in the development of our new Nation”). At bottom, market failure occurs when there is no incentive for private businesses to provide a service. Historically, the provision of national and international mail services at affordable prices has been among the market failures the government has rectified. See id. (noting that “[b]y the early 18th century, the posts were made a sovereign function in almost all nations because they were considered a sovereign necessity”). Creating what is now called the United States Postal Service was the American answer. See id.
To be sure, in modern times, private players have partially entered the market. Consistent with rational economic incentives to seek the highest returns, these private companies have cornered the express post market niche. They do not, however, deliver letters at the current first class rate of 42 cents anywhere in the country. Typically, private companies provide rush service at much higher rates and do not possess the infrastructure nor economic incentive to deliver mail on the same scale as the Postal Service. Tellingly, they limit by contract of carriage their liability to a modest fixed amount.
The Postal Service provides cheap rates because “it does not seek profits, but only to break even.” U.S. Postal Serv. v. Flamingo Indus. (USA) Ltd., 540 U.S. 736, 747, 124 S.Ct. 1321, 158 L.Ed.2d 19 (2004). We benefit from these discounted rates at a cost. In exchange for universal mail delivery at artificially low but affordable prices, which the market left to its own devices has no incentive to provide, we may not sue the Postal Service for damages if our mail is not delivered. See 28 U.S.C. § 2680(b).1 Of course, those seeking greater protection, such as a guarantee that overnight mail will be delivered, may pay the premiums that private companies charge. The Postal Service itself offers for additional payment insurance and a guarantee that mail will be delivered.
The Postal Service has grown and become a competitive business in its own right. See Council of Greenburgh, 453 U.S. at 122, 101 S.Ct. 2676 (stating that “[t]he Postal Service today is among the largest employers in the world”). Immunity from all types of law suits, Congress has recognized, is no longer appropriate. See 39 U.S.C. § 401(1). For example, the Postal Service is not immunized when, while driving in the course of delivering mail, a postal employee negligently operates a postal vehicle resulting in personal injury to another driver. See, e.g., Kosak v. United States, 465 U.S. 848, 855, 104 S.Ct. 1519, 79 L.Ed.2d 860 (1984). At the same time, Congress has left undisturbed immunity for the Postal Service’s core function' — the delivery of mail. See 28 U.S.C. § 2680(b). The majority distorts these carefully drawn lines and now exposes the Postal Service to liability where Congress intends none.
B
This is at heart a simple claim that the Postal Service failed to deliver commercial mail. The mail did not reach the postal *821patron because the postmaster prematurely closed the rented post office box following M.B.’s attempts to renew the rental term.
M.B. Financial Group, Inc. had rented a post office box for an additional six-month term from a San Diego, California branch station of the U.S. Postal Service. It paid some fifty dollars monthly for the privilege. M.B. hoped to receive responses (and profit) from its direct mail solicitations enticing members of local unions to apply for and secure mortgage loans it offered.
No one disputes that the Postal Service botched the processing of the renewal rental payment and M.B. did not receive the extension of its lease. The post office box was closed too soon; M.B. did not receive all of its mail. No matter the legal characterization, however, M.B. wants as consequential damages the money it thinks it would have realized had it actually received the responses from mortgage-seeking union members, issued mortgages to qualified borrowers, and earned commissions, fees, and interest from the loans. It estimates the loss to be millions of dollars.
Although the facts, if proven, may well state a viable claim for breach of the post office box rental agreement, there can be no viable cause of action for millions of dollars in consequential damages as a result of the postmaster’s negligence. It would be astounding to learn that Congress intended otherwise when it enacted § 2680(b).
II
The majority correctly describes the statutory scheme codifying the basic principles discussed above. The analytic starting point is that, as an “independent establishment of the executive branch of the Government of the United States,” the U.S. Postal Service is protected from suit by the doctrine of sovereign immunity unless Congress has specifically waived immunity. 39 U.S.C. § 201; Flamingo Indus., 540 U.S. at 740, 124 S.Ct. 1321.
And there can be no dispute that Congress has waived certain aspects of the Postal Service’s immunity from suit. The Postal Reorganization Act of 1971, 39 U.S.C. § 401(1), recognized that the Postal Service could “sue and be sued in its official name.” See also Flamingo, 540 U.S. at 741, 124 S.Ct. 1321. Indeed, Congress provided, the waiver of sovereign immunity codified in the Federal Tort Claims Act “shall apply to tort claims arising out of activities of the Postal Service.” 39 U.S.C. § 409(c). Nevertheless, Congress was unwilling to extend liability to “[a]ny claim arising out of the loss, miscarriage, or negligent transmission of letters or postal matter.” 28 U.S.C. § 2680(b). That is what happened here. Nonetheless, my colleagues misread the scope of this bar to revive M.B.’s suit.
Ill
The majority’s reading of Dolan v. U.S. Postal Serv., 546 U.S. 481, 126 S.Ct. 1252, 163 L.Ed.2d 1079 (2006), the one case in which the Supreme Court has interpreted the contours of the negligent transmission exception, goes too far. In that case, the plaintiff tripped and fell over packages that a Postal Service employee placed on her porch. The Supreme Court explained that “in isolation, the phrase ‘negligent transmission’ could embrace a wide range of negligent acts committed by the Postal Service in the course of delivering mail, including creation of slip-and-fall hazards from leaving packets and parcels on the porch of a residence.” Id. at 486, 126 S.Ct. 1252. After reviewing both “context and precedent,” the Court was persuaded that “a narrower reading [of the bar to *822suit]” was required; one that would permit the type of slip-and-fall claim that Dolan urged. Id.
In reaching this conclusion, as the majority correctly notes, the Court drew on its decision in Kosak v. United States, 465 U.S. 848, 104 S.Ct. 1519, 79 L.Ed.2d 860 (1984). In that case, the Court observed that “ ‘[o]ne of the principal purposes of the Federal Tort Claims Act was to waive the Government’s immunity from liability for injuries resulting from auto accidents in which employees of the Postal System were at fault.’ ” Dolan, 546 U.S. at 487-88, 126 S.Ct. 1252 (quoting Kosak, 465 U.S. at 855, 104 S.Ct. 1519). This stated purpose led the Court in Dolan to reject a broad reading of the bar to suit, reasoning that “[ajlthough postal trucks may well be delivering — and thus transmitting' — mail when they collide with other vehicles, Ko-sak indicates the United States, nonetheless, retains no immunity.” Id. at 488, 126 S.Ct. 1252. Understandably, Dolan’s claim was not barred.
We confront a very different factual situation that does not easily lend itself to analogy with automobile accidents resulting from postal employee tortious negligence or slip and falls resulting from negligent placement of postal articles. Indeed, Dolan itself recognized situations, similar to this one, in which the Postal Service would retain immunity:
We think it more likely that Congress intended to retain immunity, as a general rule, only for injuries arising, directly or consequentially, because mail either fails to arrive at all or arrives late, in damaged condition, or at the wrong address. Illustrative instances of the exception’s operation, then, would be personal or financial harms arising from nondelivery or late delivery of sensitive materials or information (e.g., medicines or a mortgage foreclosure notice) or from negligent handling of a mailed parcel (e.g., shattering of shipped china). Such harms, after all, are the sort primarily identified with the Postal Service’s function of transporting mail throughout the United States.
Id. at 489, 126 S.Ct. 1252 (emphasis added).
The financial harm suffered by M.B. arose from nondelivery of its mail. Stated another way, the damages that M.B. seeks arise “consequentially, because mail either fail[ed] to arrive at all or arrive[d] late, in damaged condition, or at the wrong address.” Id. For this occurrence, Congress has not waived sovereign immunity. See 28 U.S.C. § 2680(b).2
The majority insists that we make this case more complicated than it is. It reads Dolan “as distinguishing between the historically governmental service of carrying the United States mail and the performance of acts that may be related to delivery, but constitute more ordinary activities that private actors engage in as well.” Op. *823at 817. This observation may be correct as far as it goes. But it is the majority’s application that fails to persuade. The majority concludes that “the alleged negligence was not in transmitting the mail to the proper place of delivery. Rather, it was in the admittedly improper handling of MB Financial’s payment for its post office box, due to the failure to process the renewal. The negligence occurred after the mail was transmitted to the Post Office, and in this sense is similar to the negligence of the postal delivery employees in Dolan who did not put the boxes in an appropriate place after they had been delivered to the right address.” Op. at 818. That the complaint pleads a cause of action for negligence based on allegations that the $50 rental renewal fee was improperly processed does not speak to the nature of the damages sought. The damages arise in this case solely because the mail failed to reach its destination point, and for that occurrence the Postal Service is immune. We were reversed in Flamingo Industries (USA) Ltd. v. U.S. Postal Service because we thought the Postal Service would face similar antitrust liability to that of its competitors when Congress said the corporation could “sue and be sued” as if it were a private entity rather than part of the government. 302 F.3d 985 (9th Cir.2002), rev’d, 540 U.S. at 744-48, 124 S.Ct. 1321. We were wrong then. We are wrong now.
The majority’s rule would have us engage in a type of highly particularized and complicated temporal debate about when transmission ends and delivery-related activity begins — the former protected by sovereign immunity and the latter not. The majority’s reading of Dolan, by way of example, would have to mean that transmission ended at the porch steps. That interpretation could have force if the postal employees, say, took a break at the porch and then continued on to place the mail on the porch. Yet, what would be the result if the postal employees walked, without pause, from the Jeep onto the porch, placing the parcels along the sidewalk leading up to the porch? Would the Postal Service escape liability because the mail was still in transit?
There is, in my view, no way to reach a reasoned result under such an analogy. Neither Dolan nor the statutory scheme compel the result the majority reaches, and a more workable solution is apparent from the case law. The common thread among the cases is that where the damages that flow from the alleged negligence are injuries distinct from nondelivery, late delivery, or loss of mail, the exception to immunity does not apply. In Dolan, the damages sought surely sounded in pain and suffering and had nothing to do with the mail other than it was placed in a negligent manner and created a trip-and-fall hazard that proximately caused the pain and suffering. Similarly, in the illustrative situation described in Kosak, the damages from the auto accident were unrelated to the mail; they too were pain and suffering and other attendant tort damages.
The commercial damages M.B. wants here, no matter how liberally we construe the complaint, are the value of the mortgage business lost when the mail was not placed in its rented mailbox. In other words, M.B. prays for damages consisting of “financial harms arising from nondelivery or late delivery of sensitive materials or information.” Dolan, 546 U.S. at 489, 126 S.Ct. 1252. Recovery on those grounds, no matter how artfully the plaintiff might choose to plead the alleged negligence claim, is foreclosed because “[sjuch harms, after all, are the sort primarily identified with the Postal Service’s function of transporting mail throughout the United States.” Id. Congress has not *824waived its sovereign immunity for this kind of action. 28 U.S.C. § 2680(b).
IV
Because the majority would allow recovery of enormous consequential commercial damages for what amounts to a simple claim of failure to deliver mail, I respectfully dissent from part III A of the opinion. Although M.B. states no colorable claim with respect to its negligence claim, I agree that M.B. may recover under a state law breach of contract theory for premature loss of its post office box. Damages would be limited to a refund of the fee to renew the post office box.

. Title 28, section 2680(b) of the United States Code provides that the Federal Tort Claims Act's waiver of immunity found in 28 U.S.C. § 1346(b) “shall not apply to ... [a]ny claim arising out of the loss, miscarriage, or negligent transmission of letters or postal matter.”

. The majority laments my reading of Dolan as incomplete because, my colleagues argue, Dolan further stands for the proposition that “losses of the type for which immunity is retained under § 2680(b) are at least to some degree avoidable or compensable through postal registration and insurance.” 546 U.S. at 490, 126 S.Ct. 1252. I am unpersuaded that this statement, or the fact that the parties appear to agree that no insurance was available, changes the outcome. Insurance for the early closing of a post office box may not be available, but that is not the risk for which M.B. now seeks indemnification. It wanted its mail to arrive, mortgages to be placed through its offices, and to thereby derive financial benefit from its direct mail solicitations. There were a number of ways M.B. could have structured its business transactions to protect itself from this risk. For example, rather than look to the Postal Service, M.B. could have purchased business loss insurance.