WASHINGTON (CN) - Missing glue on a bulk mailing will cost Sears, Roebuck and Co., and two other companies more than $1 million, a federal judge ruled Wednesday.
In 2014, Sears, along with Segerdahl Graphics and Aspen Marketing Services, sued the United States Postal Service after it disqualified the companies from lower shipping rates on mailers because the mailers were not sealed properly.
"This is case about an extra dab of glue - just an extra bit of stickum worth $1.25 million," U.S. District Judge Rosemary Collyer wrote in her opinion.
Sears, Segerdahl and Aspen mailed non-compliant fliers advertising three events in 2009. In 2012 the Postal Service certified debts against the companies that totaled $1.25 million.
The Postal Service's rule requires companies to seal rectangular self-mailers on both the top and the bottom as well on the open edge created when the mailer is folded in half.
This prevents the Postal Service's processing machines from jamming on the open ends, according to the opinion.
The companies said their mailers were sealed on the corners, and that the Postal Service's rule is not clear about where on each edge companies must seal their mailers.
The companies claimed the Postal Service's decision was inconsistent with regulations and violated the Fifth Amendment because it was "retroactively reinterpreted."
They also claimed the Postal Service charged them more than the costs the service actually incurred, the ruling says.
The Postal Service's decisions are not subject to judgment under the Administrative Procedures Act, Collyer said, and therefore the agency can be said to have engaged in reasonable decision-making if it gave "reasoned consideration" to the case.
Because of this, Collyer said, she had to begin from a place of "strong presumption" in the Postal Service's favor.
"The Postal Service's decision on a mailing rate classification should be overturned only when 'clearly wrong,'" Collyer wrote.
The companies attempted to argue Collyer should not grant the postal service this deference because the "reasoned decision-making standard" applies just to the agency's investigation of the offense, not its interpretation of its rules, according to the opinion.
And even so, the companies said, the Postal Service is not an agency but a regulated monopoly not subject to any deference from a judge. They also used old cases regarding railroad tariffs to argue Collyer should decide ambiguities in postal rates against the Postal Service, according to the opinion.
But none of these arguments moved Collyer, who decided to begin with the presumption the Postal Service decided correctly in determining the companies did not seal their mailers properly.
In August, Collyer ruled Sears could not add three documents to the administrative record because the Postal Service did not use the documents when making the decision the companies challenged.
Furthermore, Collyer determined the companies exaggerated the requirements of the Postal Service regulation when they claimed the agency required glue that "'literally touches the top edge with no clearance allowed.'"
"The problem was not an off-center tab or glue spot," Collyer wrote. "The problem was that there was essentially no seal on the top and the bottom to Plaintiffs' mailers to prevent them from fanning open."
In regard to the companies' claims the regulation violated their due process rights, Collyer said the parties had plenty of notice that their mailers would not comply with Postal Service regulations.
The companies could have used any of a number of publications the Postal Service provides to the public, she said, or could have relied on warnings the companies received from the agency regarding the proper sealing of mailers in the past.
Collyer ruled the Postal Service also did not need to prove it was damaged in order to charge the companies, invalidating the companies' final claim.
"Some cases involve sticky issues," she wrote. "Not this one. The factual issues are decidedly not sticky enough, as the trouble here was the insufficient use of glue. The key issue raised is whether Plaintiffs' mail pieces were sealed 'on the top and bottom.' They were not."
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