“that they are trustworthy under some exception to the rule….” Id. at 155-56 (filed under seal). The admission of the documents into evidence was subject to the Postal Service’s right to file a motion to strike by June 23, 2010. Id. at 666 (filed under seal). The Postal Service did not file a motion to strike. P.O. Ruling C-2009-1/24, Presiding Officer’s Ruling Granting, in Part, Postal Service’s Motion for Institutional Witness, July 6, 2010. Acting pursuant to rule 30(e)(3) of the Commission’s rules of practice, the Presiding Officer ordered GameFly to produce an institutional witness to stand cross-examination on the written cross-examination previously designated by the Postal Service at the June 16, 2010 hearing. P.O. Ruling C2009-1/24 at 9. In so, the Presiding Officer limited the Postal Service’s opportunity to cross-examine in the following respects: Cross-examination was denied with respect to legal conclusions in the GameFly Memorandum. Id at 12. was denied regarding the authenticity of the documents cited in the GameFly Memorandum or the application of the rule to those documents. Cross-examination was permitted with respect to GameFly’s interpretation of documents cited in its institutional discovery responses, including documents that were also cited in the GameFly Memorandum. Id. Cross-examination regarding GameFly’s business decisions was limited to decisions referenced in those GameFly discovery responses that related to the effects of theft, loss, or breakage of DVDs on GameFly’s mailpiece design. Id. at 13. Cross-examine was denied with respect to transportation cost information that GameFly did not possess. Id. at 13-14. Cross-examination regarding special Netflix mail drops and signage for Netflix returns was limited to factual contentions or inferences drawn by GameFly in its institutional discovery responses. Id. at 14.
demonstrate that the budget- and performance-driven operational decision making process ensures efficient processing. Id. at 71-72. In its reply brief, the Postal Service describes what it sees as shortcomings in the OIG Audit Report. Id. at 76-81. The Postal Service asserts that the OIG Audit Report imprecisely and incorrectly uses the term “manual processing.” Id. at 79. It also argues that the report lacks the documentation normally required of studies relied upon in Commission proceedings, and that it gives only general descriptions of the methodology, assumptions and calculations it uses. Id. at 79-80. The Postal Service’s reply brief also introduces arguments that data filed with the Commission in previous dockets support its claim that its treatment of Netflix mail improves the overall efficiency of mail processing. The Postal Service asserts that, while the nominal unit cost of single-piece First-Class Mail letters increased between FY 2005 and FY 2009, it has not increased as quickly as has the mail processing hourly labor cost. While conceding that this analysis is not conclusive, the Postal Service states that the decline in “‘real’ mail processing costs” can be explained by the claims of witnesses Belair and Seanor that one-touch processing of Netflix reduces the cost of DVD mailers. Id. at 74-75. The Postal Service states that MODS data do not reflect the hours in collection mail separation operations that would be implied by the high cost scenarios in the Christensen Study. Id. at 75. It also asserts that the In-Office Cost System (IOCS) is able to identify the cost of Permit Reply Mail (PRM), and that the cost of this type of mail exhibits a lower average cost per piece than the remainder of single-piece First-Class Mail letters. Id. at 76. GameFly’s position. GameFly disputes the Postal Service’s claim that cost reductions underlie its extensive manual processing of Netflix DVD return mail and asserts that the true reason is to minimize disc breakage. GameFly Brief at 67-68. Supported by the analysis of witness Glick, GameFly asserts that, rather than reducing costs, the Postal Service’s manual processing of Netflix mail greatly increases costs. GameFly Brief-NP at 68. It argues that the Postal Service witnesses’ claims of efficiency gains from the
depending on whether a given mailer presorts its outbound pieces. Such differences are the result of reasonable pricing differences that exist between the various and presort rates applicable to First-Class Mail letters and flats. The price granted by the remedy is not as low as the alternative remedy sought by GameFly, and even at this rate, GameFly mail may continue to generate more than double the contribution per piece than Netflix mail. However, the remaining rate disparity is reasonable in light of the differences between letter-shaped and flatshaped round-trip DVD mailers. By making the letter-shaped and flat-shaped round-trip DVD mailer rates available to all qualifying mailers, any potential discrimination against other similarly situated mailers is also remedied. Implementation of the remedy. As noted at the beginning of this section, the Commission has broad authority under section 3662(d) to fashion an appropriate remedy when it finds a complaint to have been justified. Since this is the first proceeding under section 3662 in which the Commission will impose a remedy, it is appropriate not only to specify the content of the remedy as discussed above, but to give the Postal Service both adequate direction regarding the form of the remedy and adequate time to implement the remedy. Attached to this Order as Appendix B is Mail Classification Schedule language that sets forth the terms of the pricing remedy established by this Order for round-trip DVD letter and flats mailers. Within 15 days of the date of issuance of this Order, the Postal Service shall file with the Commission a notice stating the date upon which Appendix B and the rates and terms and conditions contained therein shall be implemented. Such implementation date shall not be more than 60 days following the date of issuance of this Order. For good cause shown, the Commission may extend the implementation date by up to 30 days. Not than 45 days prior to the implementation date of Appendix B, the Postal Service shall provide public notice of rates and terms and conditions contained in Appendix B.