Monday, December 01, 2003

The Courts: The Post Office--Floor Wax or Dessert Topping?

This morning I attended oral arguments at the Supreme Court in United States Postal Service v. Flamingo Industries, a case where CAC filed an amicus brief. The case presents a simple question: Is the Postal Service a “person” subject to suit under the antitrust laws. Flamingo Industries brought an antitrust claim against USPS over a procurement dispute. USPS said the antitrust laws only applied to persons—including corporate persons—organized under the laws of the United States; agencies of the United States itself are not persons but rather sovereign entities. The always-contrarian U.S. Court of Appeals for the Ninth Circuit disagreed, holding USPS, as presently structured, was a person amenable to antitrust lawsuits. The Solicitor General, acting on USPS’ behalf, asked the Supreme Court to reverse.

Deputy Solicitor General Edwin S. Kneedler represented USPS. His advocacy was unremarkable, and consisted largely of laundry listing the various ways USPS was a traditional government agency. His central theme was that USPS carries out an essential sovereign function—delivering the mail—and subjecting the Service to antitrust laws would inevitably compromise that sovereign function.

Harold J. Krent, dean of the Chicago-Kent College of Law, argued on behalf of Flamingo Industries. Krent’s argument mirrored Kneedler’s, only he laundry listed the ways USPS acted as a commercial business. Krent conceded that the First Class mail monopoly carried out a sovereign function, but that USPS also competed with private businesses in areas not related to that monopoly. Much of Kneedler’s discussion with the justices dealt with the precise nature of USPS’ private-sector competition and the need for antitrust protection.

Most of the Court’s questions came from the left side of the bench. I don’t mean ideologically; I mean seating. Justices Ginsburg, Souter, and Scalia—all of whom sit to Rehnquist’s left from the audience’s viewpoint—did most of the questioning. Ginsburg focused largely on how to apply precedent. Souter sought to understand the commercial-vs.-sovereign debate. Scalia largely mocked everyone, especially Kneedler. Scalia was particularly amused when Kneedler asserted Congress’ intent in reorganizing the Post Office in 1970 was to remove politics from the department’s operations. Scalia noted the conundrum of trying to insulate a government agency from the government itself.

Scalia also indirectly raised the issue discussed in CAC’s amicus brief—whether USPS’ management structure is constitutionally consistent with a sovereign entity. We argued that under the Court’s prior decision in Morrison v. Olson, a properly constituted executive department must have its head appointed by the President with the consent of the Senate. The USPS’ chief executive is appointed by nine presidentially-appointed governors, but not by the President himself. In our view, this means either USPS’ structure is unconstitutional, or that it is not genuinely an executive agency entitled to sovereign status. For purposes of this case, we argued the latter conclusion. Scalia never directly raised our argument, but he did ask Kneedler several questions about USPS’ structure and how it might affect the Service’s sovereign status. Kneedler once again argued that Congress wanted to retain USPS as a sovereign entity while depoliticizing its control. But, as Scalia noted before, this makes no sense; any agency under government control is inherently political.

Justice O’Connor had the most telling comment of the morning. At one point, the famed pragmatist asked with some exasperation why this wasn’t a question for Congress. In other words, if Congress wanted to apply or exempt USPS from the antitrust laws, they should just say so. Of course, if Congress were clear in the construction of its laws, we probably wouldn’t need appellate courts. Still, O’Connor raised a good point. The postal organization laws do not clearly determine whether USPS should be treated like a regular business for antitrust purposes; given the economic importance of USPS, Congress should be clear about such things.

The entire back-and-forth on was USPS a business or a sovereign agency reminded me of the old Saturday Night Live commercial for Shimmer—was it a floor wax or a dessert topping? Unfortunately, none of the justices seemed willing to play the Chevy Chase part and declare USPS was both a business and a sovereign agency. That is, after all, the right answer. But the Solicitor General would not concede that point, and the justices seemed inclined to vindicate his position.

Krent certainly gave the justices enough solid arguments in favor of his client’s position. But my overall sense was that the Court wanted to overturn the Ninth Circuit and spare USPS the burden of defending itself in antitrust lawsuits. Kneedler effectively countered many of Krent’s arguments, and if I were scoring this like a debate tournament, I would give Krent at best a draw. If the justices saw things that way, they are likely to resolve the tie in favor of the government’s position. This could end up being a unanimous reversal. There wasn’t one justice, not even Scalia, that I would consider a definite vote for Flamingo.

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