Douglass v. United States Postal Service

Filing 6

OPINION AND ORDER: GRANTS Plaintiff 21 days to serve the USPS with process according to Federal Rule of Civil Procedure 4(i)(1). If he does not do this, his case will be dismissed. GRANTS IN PART the USPS's motion to vacate and dismiss 4 , as to the request to vacate the default judgment, VACATES the default judgment against the USPS. DENIES IN PART the USPS's motion to vacate and dismiss 4 , as to the request to dismiss Mr. Douglass's claim. Signed by Judge Robert L Miller, Jr on 5/22/2017. (Copy mailed to Pro Se Party and Miami Co Superior Small Claims Court)(lhc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
JOSHUA DOUGLASS,

)
)
Plaintiff,
)
)
v.
)
)
UNITED STATES POSTAL SERVICE, )
)
Defendant.
)

Cause No. 3:17-cv-250 RLM-MGG

OPINION AND ORDER
Joshua Douglass brought a small claims action against the United States
Postal Service in Miami Superior Court I for breach of contract, alleging that the
USPS refused to send him money owed on an insurance claim. According to that
court’s case summary, the notice of Mr. Douglass’s claim and notice to appear
were sent to “USPS Insurance Claim” at an address in St. Louis via certified mail.
The USPS didn’t appear at the hearing and the Miami Superior Court entered a
default judgment against the USPS for the full amount requested, plus interest
and costs. Stamps on the notice of claim the USPS filed in this court indicate
that the notice of claim arrived at the USPS Law Department in Chicago almost
two months after the default judgment was entered.
The USPS removed the case to this court, which has jurisdiction over
actions against the USPS. 39 U.S.C. § 409(a). The USPS now asks this court to
vacate the default judgment, Fed. R. Civ. P. 60(b)(4), and dismiss the suit, Fed.
R. Civ. P. 12(b). The USPS certified that its motion and brief were sent to Mr.
Douglass via first-class mail, but Mr. Douglass didn’t respond to it.

I. MOTION TO VACATE
The USPS argues that the default judgment should be vacated because the
USPS was improperly served, and so the Miami Superior Court didn’t have
personal jurisdiction. The court may relieve the USPS of a final judgment if that
judgment is void. Fed. R. Civ. P. 60(b). “[A] judgment is void as to any party who
was not adequately served.” Relational, LLC v. Hodges, 627 F.3d 668, 671 (7th
Cir. 2010).
The USPS should have been served as one would serve the United States
government. Generally, federal procedure doesn’t apply until removal occurs,
Fed. R. Civ. P. 81(c), so the court should look to state rules to judge pre-removal
service of process. Price v. Wyeth Holdings Corp., 505 F.3d 624, 628 (7th Cir.
2007). But a federal statute dictates how to serve the USPS, and that federal
statute requires service in the same way one would serve the United States under
the Federal Rules. 39 U.S.C. § 409(b) (“[T]he provisions of title 28 relating to
service of process . . . in suits in which the United States . . . [is a] part[y], and
the rules of procedure adopted under title 28 for suits in which the United States
. . . [is a] part[y], shall apply in like manner to suits in which the Postal Service
. . . [is a] part[y].”).
The Federal Rules require that a copy of the summons and complaint be
sent by registered or certified mail to the United States attorney’s office for the
district where the action is brought and to the Attorney General in Washington,
D.C. Fed. R. Civ. P. 4(i)(1). USPS regulations also provide for the USPS’s general
counsel to receive process. 39 C.F.R. § 2.2. Mr. Douglass doesn’t seem to have
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taken either route. By the time the court documents reached the USPS Law
Department, the Miami Superior Court had already entered its default judgment.
Without proper service of the USPS, the Miami Superior Court lacked
personal jurisdiction over it, and so the default judgment against the USPS is
void. Fed. R. Civ. P. 60(b); Relational, LLC v. Hodges, 627 F.3d 668, 671 (7th Cir.
2010); Rabiolo v. Weinstein, 357 F.2d 167, 168 (7th Cir. 1996).

II. MOTION TO DISMISS
The USPS asks the court to dismiss Mr. Douglass’s suit for lack of personal
jurisdiction, insufficient process, insufficient service of process, and failure to
state a claim. Fed. R. Civ. P. 12(b). Insufficient service of process can be enough
on its own to dismiss, even though the USPS obviously knows about the suit.
Fed. R. Civ. P. 12(b)(5); McMasters v. United States, 260 F.3d 814, 817 (7th Cir.
2001). But the court will give Mr. Douglass time to correct his error and to send
notice to the right party before dismissing. Fed. R. Civ. P. 4(m).
The United States government, including the USPS, may only be sued if it
consents to be sued. Dolan v. U.S. Postal Serv., 546 U.S. 481, 484 (2006). The
USPS argues that this case should be dismissed because it falls under an
exception to the waiver of sovereign immunity in the Federal Tort Claims Act.
Fed. R. Civ. P. 12(b)(6).
There are two routes to analyze the USPS’s sovereign immunity. First, “the
Postal Reorganization Act generally waives the immunity of the Postal Service
from suit by giving it the power to ‘sue and be sued in its official name.’” Id.
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(quoting 39 U.S.C. § 401(1)). This general waiver should be construed
expansively. U.S. Postal Serv. v. Flamingo Indus., 540 U.S. 736, 741 (2004).
But for tort claims, the Federal Tort Claims Act governs the USPS’s
immunity. 39 U.S.C. § 409(c); 28 U.S.C. §§ 2671-2680. Claims cognizable under
the FTCA should be construed under the FTCA alone. See 28 U.S.C. § 2679(a).
The FTCA provides a broad waiver of sovereign immunity: “The United States
shall be liable . . . in the same manner and to the same extent as a private
individual under like circumstances.” 28 U.S.C. § 2674. There’s an exception to
the FTCA’s waiver of immunity for “any claim arising out of the loss, miscarriage
or negligent transmission of letters or postal matter.” 28 U.S.C. § 2680(b). The
USPS argues that Mr. Douglass’s claim falls into this exception to the FTCA’s
waiver of sovereign immunity, and so his claim is barred.
The glaring problem with this argument is that the FTCA only applies to
tort claims. See 28 U.S.C. § 2674 (“The United States shall be liable, respecting
the provisions of this title relating to tort claims . . . .”) (emphasis added). The
USPS doesn’t argue why the listed exceptions to the FTCA’s waiver would apply
to a suit grounded in contract. Mr. Douglass’s only claim is for breach of contract
for not receiving payment on an insurance claim. The FTCA doesn’t impact his
suit, which stands firmly under the USPS’s general power “to sue and be sued.”
Cf. Anderson v. U.S. Postal Serv., 761 F.2d 527 (9th Cir. 1985) (holding that
sovereign immunity barred tort claim for loss of package, but not addressing the
breach of insurance contract claim).

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The USPS doesn’t argue that Mr. Douglass must exhaust administrative
remedies before suing or that he hasn’t done so. Rather, it simply says that
“Defendant

notes

that

the

United

States

Postal

Service

provides

an

administrative process for insurance claims” and then cites to that process.
First, “where Congress has not clearly required exhaustion, sound judicial
discretion governs.” McCarthy v. Madigan, 503 U.S. 140, 144 (1992). But USPS
doesn’t say there’s an exhaustion requirement here (and, once again, the FTCA’s
explicit exhaustion requirement, 28 U.S.C. § 2401(b), can’t be grafted onto a
contract suit). And even if USPS did, exhaustion is generally an affirmative
defense. See Jones v. Bock, 549 U.S. 199, 212 (2007) (examining exhaustion
under the Prisoner Litigation Reform Act). Simply pointing out the existence of
an administrative process doesn’t mean Mr. Douglass failed to exhaust it.
The court won’t grant the USPS’s motion to dismiss yet, but will allow Mr.
Douglass 21 days to correctly serve process on the USPS. If he doesn’t do so,
then the court will have to dismiss.

III. CONCLUSION
Based on the foregoing, the court:
(1) GRANTS Mr. Douglass 21 days to serve the USPS with process
according to Federal Rule of Civil Procedure 4(i)(1). If Mr. Douglass doesn’t
do this, his case will be dismissed.
(2) GRANTS IN PART the USPS’s motion to vacate and dismiss [Doc.
No. 4], as to the request to vacate the default judgment.
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(3) VACATES the default judgment against the USPS.
(4) DENIES IN PART the USPS’s motion to vacate and dismiss [Doc.
No. 4], as to the request to dismiss Mr. Douglass’s claim.
SO ORDERED.
ENTERED: May 22, 2017
/s/ Robert L. Miller, Jr.
Judge
United States District Court
cc: Joshua Douglass

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