New Arizona Case - Governmental Immunity Limits - Post Office

By Ted Schmidt, Dev Sethi, Matt Schmidt, Burt Kinerk

New Arizona Case - Governmental Immunity
Posted by: Ted Schmidt
November 07, 2008

MB Financial Group, Inc. v. United States Postal Service, No. 06-56267 , ___ F.3d ___, (9th Circuit, September 25, 2008). (Judge Schroeder). THE UNITED STATES POST OFFICE IS NOT IMMUNE FOR FAILING TO MAKE AVAILABLE A POST OFFICE BOX TO CUSTOMER IT HAD PROMISED TO PROVIDE A BOX.

The issue in this case was whether or not the United States Postal Service (USPS) can be held liable for failing to make available a post office box it was obligated to provide for receipt of plaintiff's business mail.
MB Financial Group [MB] sells mail order mortgage loans. It depends upon receiving mailed in responses to its solicitations from potential customers.

MB rented a post office box from the USPS branch office in San Diego and paid for six months usage. The USPS apologized and acknowledged that it "may have been at fault" for the "premature closure of [the] PO Box" due to "improper handling of fees."

MB sued USPS for negligence and breach of contract. USPS moved to dismiss under Rule 12 of the Federal Rules of Civil Procedure for failure to state a claim on the basis that it has immunity for "any claim arising out of the loss, miscarriage or negligent transmission of letters or postal matter." Section 2680(b) & 1346(b) of the Federal Tort Claims Act.

The United States Supreme Court first recognized that the postal service is "an independent establishment of the executive branch" 39 U.S.C. §201, and therefore enjoys sovereign immunity absent a waiver. However, Congress provided such a waiver in the Postal Reform Act (PRA) where it specifically provides that the USPS has the power to "sue and be sued in its official name." It is true that there is an exception for claims arising out of the negligent transmission of mail.

To determine whether the failure to provide a post office box falls within this exception to the waiver of sovereign immunity, the court first looked at the decision of Dolan v. U.S. Postal Service, 546 U.S. 481 (2006). In this case a plaintiff sued when she fell over boxes negligently placed at her doorstep by the postal service. Here the Supreme Court found the issue was the negligent placement of boxes after they had already been delivered and not the actual transmission of mail and therefore the exception did not apply.

Based upon this reasoning the 9th circuit in this case determined 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 the MD Financials payments for its post office box, and the failure to process the renewal. The negligence occurred after the mail was transmitted to the post office." Accordingly, plaintiff did state a claim for negligence and on essentially the same facts a proper claim for breach of contract. The plaintiff alleged he paid for the box for six months and that the USPS breached the contract by not providing the box for that full term.