[Federal Register Volume 78, Number 77 (Monday, April 22, 2013)]
[Notices]
[Pages 23786-23790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-09373]
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POSTAL REGULATORY COMMISSION
[Docket No. C2009-1R; Order No. 1700]
Settlement Conference
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
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SUMMARY: The Commission is noticing a recent order convening a
settlement conference between GameFly, Inc. and the Postal Service.
This notice informs the public of this development and takes other
administrative steps, including appointment of a settlement
coordinator.
DATES: Settlement conference: April 23, 2013 at 10:00 a.m.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at http://www.prc.gov. Those who cannot submit comments
electronically should contact the person identified in the FOR FURTHER
INFORMATION CONTACT section by telephone for advice on filing
alternatives.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
at 202-789-6820.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. Background
III. GameFly Motion, Postal Service Reply, and GameFly Response
IV. Analysis
V. Settlement Procedures
I. Introduction
The latest issues in this docket come before the Commission on
remand from the United States Court of Appeals for the District of
Columbia.\1\ Following the issuance of the Court's mandate, on March 7,
2013, GameFly, Inc. (GameFly) filed a motion requesting the Commission
to establish standards and procedures for proceedings on remand.\2\
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\1\ GameFly, Inc. v. Postal Regulatory Commission, 704 F.3d 145
(D.C. Cir. 2013) (GameFly).
\2\ Docket No. C2009-1, Motion of GameFly, Inc., to Establish
Standards and Procedures to Govern Proceedings on Remand, March 7,
2013 (GameFly Motion).
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The Postal Service replied to the GameFly Motion and GameFly filed
a response.\3\ For the reasons discussed below, the Commission defers
action on these filings and will convene a settlement conference to
pursue the possibility of the parties agreeing to a mutually acceptable
resolution of the remaining issues in the remanded proceeding. The
settlement conference will convene at 10:00 a.m. April 23, 2013 in the
Commission's hearing room.
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\3\ See United States Postal Service Reply in Opposition to
Motion of GameFly, Inc., to Establish Standards and Procedures to
Govern Proceedings on Remand, March 14, 2013 (Postal Service Reply);
Response of GameFly, Inc., to March 14 USPS Opposition to GameFly
Motion to Establish Standards and Proceedings on Remand, March 18,
2013 (GameFly Response). Accompanying the GameFly Response was a
motion requesting leave to respond to the Postal Service Reply.
Motion of GameFly, Inc., for Leave to Respond to March 14 USPS
Opposition to March 7 GameFly Motion, March 18, 2013. The motion for
leave to respond is granted.
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II. Background
Proceedings in this docket were instituted by GameFly's filing of a
complaint under 39 U.S.C. 3662. In its complaint, GameFly alleged that
rates and services offered by the Postal Service to certain DVD mailers
violated prohibitions on undue or unreasonable discrimination under 39
U.S.C. 101(d), 403(c), 404(b), and 3622(b)(8).\4\
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\4\ Docket No. C2009-1, Complaint of GameFly, Inc., April 23,
2009, at 1 (Complaint).
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GameFly, which is in the business of renting video game DVDs,
alleged that the Postal Service discriminated against GameFly by not
providing the same treatment to GameFly's mail as it did to the mail of
Netflix and Blockbuster (which are primarily in the business of renting
movie DVDs). Id. at 12. GameFly alleged further that the Postal Service
manually culled and processed Netflix and Blockbuster's mail, allowing
them to mail one-ounce First-Class letters without paying a non-
machinable surcharge or exposing their DVDs to the risk of breakage on
automated machines.
[[Page 23787]]
Id. at 8-9. GameFly asserted that, unlike Netflix and Blockbuster, it
decided to add a protective cardboard insert and mail its DVDs as two-
ounce First-Class flats in order to avoid automated machines and reduce
the risk of breakage. Id. at 5. At the time the Complaint was filed,
the First-Class one-ounce letter rate was $0.42 and the First-Class
two-ounce flat rate was $1.00. Id. at 6.
Determination of undue discrimination. After extensive discovery,
testimony, filings, and hearings, the Commission issued an order in
which it determined that the Postal Service had unduly discriminated
against GameFly.\5\ The Commission reached this conclusion by using a
three-part test that considered whether: (1) GameFly had been offered
less favorable rates or terms and conditions than another mailer; (2)
GameFly was similarly situated to the other mailer; and (3) there was
no rational or legitimate basis for the Postal Service to deny it the
more favorable rates or terms or conditions provided to the other
mailer. Id. at 28. The Commission determined that all three prongs of
the test had been satisfied. Id. at 108.
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\5\ Order on Complaint, April 20, 2011, at 108 (Order No. 718).
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GameFly's proposed remedies. Although it found that the Postal
Service had unduly discriminated against GameFly, the Commission
rejected the two remedies suggested by GameFly. The first was an
operational remedy that would have required the Postal Service to offer
``a measurable and enforceable level of manual culling and processing
of DVD mailers sent at machinable letter rates.'' Id. at 110. The
Commission explained that it was reluctant to assume responsibility for
oversight of Postal Service operations at the level proposed by GameFly
and wary of the ``significant administrative costs'' that the Postal
Service could incur attempting to enforce a particular level of manual
culling and processing. Id. at 111.
GameFly's second proposed remedy was a rate-based remedy, under
which the Postal Service would have been required to publish a reduced
rate for flat-shaped DVD mailers designed to produce the same average
contribution per piece for both flat-shaped and letter-shaped DVD mail
(the ``equal contribution remedy''). Id. The Commission rejected this
second proposed remedy because the models used by GameFly's witness in
support of this remedy were ``not sufficiently accurate'' to establish
an appropriate rate. Id. at 112. The Commission stated a preference for
allowing the Postal Service, rather than the Commission, to ``exercise
statutory flexibility'' in ratemaking and expressed concern that the
rate-based remedy ``fails to directly address the consequences of the
preferential treatment afforded Netflix.'' Id. at 112-113.
Commission remedy. In lieu of GameFly's proposed remedies, the
Commission opted to establish a ``niche classification'' for round-trip
DVD mail. Id. at 113. Order No. 718 added a ``Letter Round-Trip
Mailer'' category and a ``Flat Round-Trip Mailer'' category to the Mail
Classification Schedule (MCS). Id. Appendix B. The Letter Round-Trip
Mailer category allowed round-trip DVD mailers to send one-ounce
letter-shaped mail at the single-piece machinable letter rate and
prevented the Postal Service from applying a non-machinable surcharge
to such mail. Id. at 1. The Flat Round-Trip Mailer category allowed
round-trip DVD mailers to send flat-shaped mail of up to two ounces at
the one-ounce single-piece First-Class flats rate. Id. at 2. The
Commission characterized this remedy as providing GameFly with
treatment comparable to the treatment the Postal Service gave Netflix.
Id. at 114. However, the remedy also resulted in a higher rate and a
higher per-piece contribution for round-trip DVD mail sent as flats.
Id. at 115. The Commission found the higher rates and contribution to
be justified by ``cost differences and by general pricing differences
between First-Class Mail flat and letter products.'' Id.
D.C. Circuit Opinion. Unsatisfied with the remedy imposed by Order
No. 718, GameFly filed an appeal with the Court. The Postal Service
elected not to appeal the Commission's finding of undue discrimination,
but did participate in the appellate proceedings in support of the
remedy prescribed by Order No. 718.
The Court rejected the Commission's remedy because it left in place
part of the discrimination it was attempting to remedy without
explaining why the ``residual discrimination'' was due or reasonable.
704 F.3d at 149. The residual discrimination identified by the Court
consisted of continuing differences in the terms of service offered to
DVD mailers of letter-shaped and flat-shaped mail. The Court explained
that the Commission ``cannot justify the terms of service
discrimination its remedy leaves in place (providing manual letter
processing to Netflix but not to GameFly) based on the companies' use
of different mailers when the use of different mailers is itself the
product of the service discrimination.'' Id.
The Court vacated the Commission's order and remanded the case to
the Commission to ``either remedy all discrimination or explain why any
residual discrimination is due or reasonable under Sec. 403.'' Id. It
expressed the opinion that the Commission would ``surely consider''
GameFly's proposed remedies on remand, but noted that ``there may be a
range of other possible remedies which would withstand appellate
review.'' Id.
III. GameFly Motion, Postal Service Reply, and GameFly Response
In response to GameFly, the parties filed a series of documents
setting out their respective positions and expectations for proceedings
on remand. The first of these was the GameFly Motion, followed by the
Postal Service Reply and the GameFly Response.
GameFly Motion. The GameFly Motion begins by outlining the issues
that GameFly considers to have been resolved by the Court's Opinion.
GameFly Motion at 1-8. It then sets forth a new proposed remedy and
several possible alternatives, as well as the standards and procedures
that GameFly asserts should be used to evaluate any alternative
remedies. Id. at 8-18.
GameFly's new remedy would require the Postal Service to charge the
First-Class Mail letter rate for all round-trip DVD mailers, whether
they choose to mail letters or flats. Id. at 9. GameFly characterizes
this remedy as ``the next best alternative'' to requiring the Postal
Service to provide GameFly's mail with the same degree of manual
processing that Netflix receives for its letter-shaped DVD mail. Id. at
11. In proposing this remedy, GameFly withdraws its previous request
for the equal contribution remedy. Id. GameFly argues that the
Commission should impose its new remedy immediately, without re-opening
the record in this docket. Id. at 13.
GameFly also identifies two alternatives to its new, preferred
remedy. The first of these alternatives would allow the Postal Service
30 days to propose a rate for DVD mailers that is the same for both
flats and letters but higher than the preferred remedy's First-Class
Mail letter rate. Id. at 14. GameFly asserts that the Postal Service
should be required to provide certain additional information to support
any such proposed rate. Id. If the Postal Service were to choose not to
submit a proposed new rate within 30 days, GameFly would have the
Commission establish a new rate for both letter- and flat-shaped
[[Page 23788]]
DVD mail at the First-Class Mail letter rate. Id.
GameFly's second proposed alternative remedy is an operational
remedy that would require the Postal Service to either provide the same
level of manual processing to Netflix and GameFly mail or to
discontinue manual processing of Netflix mail. Id. at 15. GameFly
argues that the record in this docket ``imposes a heavy presumption''
against an operational remedy, citing potential problems with
enforcement. Id. at 15-16. GameFly suggests that if the Commission
adopts an operational remedy, the Postal Service should be required to
provide certain information in support of that remedy. Id. at 17-18.
Postal Service reply. The Postal Service Reply rejects the remedies
proposed in the GameFly Motion, arguing instead that the Commission
should maintain its original remedy, but explain better why that remedy
addresses any residual discrimination. Postal Service Reply at 2, 10-
14. The Postal Service also takes issue with GameFly's list of settled
issues, asserting that GameFly is attempting to eliminate the
Commission's discretion and authority by preventing the Commission from
re-opening the record and obtaining additional guidance. Id. at 2.
The Postal Service asserts that the record contains sufficient
evidence for the Commission to explain to the Court's satisfaction that
its original remedy was sound and that any remaining discrimination is
due to local operational decisions dictated by differences in the
volume, density, and appearance of Netflix's and GameFly's mail. Id. at
11-12.
The Postal Service argues further that any rate-based remedy would
require the Commission to re-open the record to conform with
``statutory and regulatory provisions governing the establishment of
rates and classifications under the [Postal Accountability and
Enhancement Act]'' and to respect the Postal Service's authority to
direct its own operational policies. Id. at 6. It states that the
record in this docket lacks sufficient evidence to support GameFly's
proposed rate-based remedy. Id. at 6-7. The Postal Service warns that
GameFly's remedy would ``inevitably lead to questions about the
presence and effects of discrimination embodied in all rates, and the
Mail Classification Schedule in general.'' Id. at 8.
Finally, the Postal Service argues that the record does not reflect
changes in the processing of DVD mail and ``major parts of the
operating environment'' that have occurred since the record in this
docket was established. Id. at 9.
GameFly response. GameFly responds to the Postal Service Reply by
reiterating its position that the Postal Service is not permitted to
relitigate factual issues resolved by Order No. 718 (either before the
Commission or before the Court in a future appeal) or the findings of
GameFly. GameFly Response at 4-6.
GameFly concedes that there may be alternative remedies available
that would require the Commission to re-open the record. Id. at 8.
However, GameFly asserts that the degree to which the record should be
re-opened will depend on the particular alternative remedy. Id. For
instance, GameFly believes that its first alternative remedy (price
equalization at a rate established by the Postal Service) would require
little additional information, but that its second alternative remedy
(operational directives) may require ``more elaborate fact-finding.''
Id. at 8-9.
GameFly contends that, rather than attempting to place substantive
limits on potential remedies, it is proposing filing requirements
designed to elicit the information necessary to support an alternative
remedy. Id. at 9. It asserts that each of these filing requirements is
reasonable in light of the nature of the proposed alternative remedies.
Id. at 10. In particular, it asserts that because the Postal Service
argued against an operational remedy in earlier proceedings in this
docket, the Postal Service must make additional showings if it now
believes an operational remedy is justified. Id.
Finally, GameFly argues that a remedy that equalized rates for
letter- and flat-shaped DVD mailers is neither discriminatory against
other flat-shaped mail nor likely to have a significant impact on the
Postal Service's financial situation. Id. at 11-12.
IV. Analysis
The Commission has before it several remedies which the parties
believe would satisfy the court's directive to ``either remedy all
discrimination or explain why any residual discrimination is due or
reasonable under Sec. 403.'' 704 F.3d at 149. GameFly prefers a remedy
that establishes an identical rate for round-trip DVD letter and flats
mail that is equal to the First-Class Mail letter rate. GameFly Motion
at 8-13. The Postal Service vigorously opposes GameFly's preferred
remedy and encourages the Commission to stand by the remedy prescribed
by Order No. 718. Postal Service Reply at 4-5, 10-11 (``there is
sufficient evidence in the existing record to support the original
remedy, and the Commission has the authority to conduct proceedings for
that purpose, if necessary.'').
The Court has given the Commission sufficient latitude to consider
both of these remedies, as well as others including the two remedies
originally proposed by GameFly. 704 F.3d at 149 (``Upon rehearing, the
Commission will surely consider those [i.e., GameFly's earlier]
remedies, but there may be a range of other possible remedies which
would withstand appellate review.''; ``The Commission must either
remedy all discrimination or explain why any residual discrimination is
due or reasonable under Sec. 403.'').
The Commission is considering various remedies, each of which is
intended to satisfy the Court's directive. The Commission has
identified, at least preliminarily, the following options: \6\
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\6\ There is no significance to the order in which the options
are presented. As noted below, the Commission has made no decision
about any possible remedy.
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GameFly proposed remedies:
An equal rate remedy;
An equal contribution remedy;
Postal Service proposed remedy:
Original remedy set forth in Order No. 718 with
additional explanation as to why the residual discrimination is
justified; Remedies identified by the Commission:
A remedy that retains the Letter Round-Trip DVD
Mailer and Flat Round-Trip DVD Mailer categories created by Order No.
718, imposes a requirement that the Postal Service manually process all
letter-shaped DVD mail, and establishes an enforcement mechanism to
ensure manual processing is occurring at a certain level;
An operational remedy that would eliminate all special
treatment of DVDs and impose rates that apply to the mailpiece, e.g.,
the non-machinable surcharge and second ounce rates; and
An operational remedy that would require manual handling
of all letter-shaped DVDs subject to certain standards.
The Appendix provides a brief description of these alternatives.
The options outlined above do not foreclose the parties from fashioning
their own mutually agreeable relief.
The parties take different positions on whether, and to what
extent, further administrative hearings (including additional
discovery) might be necessary to resolve the remedy issue. GameFly
advocates the immediate imposition of its preferred rate-based remedy
on the basis of the existing record. GameFly Motion at 12. The Postal
Service appears to advocate a re-opening of the record to revisit many
of
[[Page 23789]]
the issues decided in Order No. 718. Postal Service Reply at 5-8.\7\
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\7\ Without, at this juncture, ruling on the propriety of
revisiting any of these subjects in the context of developing a
remedy, the Commission notes that its finding of undue
discrimination, which was not challenged by the Postal Service in
the appellate proceedings, is final and has not been remanded by the
Court for further Commission consideration.
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Given the significant differences between their positions on
remand, the parties could be headed toward further prolonged
administrative and appellate review proceedings. Such a result is
neither in the public interest nor the best interest of a sound
administrative process. This prolonged proceeding has already consumed
substantial resources of the parties and the Commission. There is no
assurance that a Commission imposed remedy will be satisfactory to both
parties. The Commission believes that it is in the public interest and
prudent for all concerned to explore the possibility of resolving the
remedy issue by settlement. Accordingly, the Commission is convening a
settlement conference to be attended by representatives of GameFly, the
Postal Service, intervenors, and the Public Representative previously
appointed to this proceeding.
The Commission takes this step with the hope that a better sense of
the remedies under consideration on remand may allow the parties to
address their differences and reach a mutually agreeable outcome. As
yet, the Commission has made no decision on a possible remedy and
expresses no preference among those described in this Order. It fully
expects that the parties will make the most of this opportunity to
fashion a remedy acceptable to both without the unnecessary use of time
or resources.
V. Settlement Procedures
Initial meeting. Pursuant to 39 CFR 3030.40, the Commission will
convene a settlement conference on April 23, 2013. To facilitate
discussions, the Commission appoints James Waclawski as settlement
coordinator. In discussing the possibility of settlement, the parties
are free to consider the remedies identified above and any others they
deem appropriate. Among the factors they should bear in mind is the
desirability of avoiding an unnecessary re-opening of the record.
Expeditious proceedings. Time is of the essence. The purpose of
these settlement discussions is to allow the parties an opportunity to
identify a mutually agreeable remedy as expeditiously as possible. The
Commission has no desire to delay unnecessarily the resolution of the
outstanding issues in this docket. To that end, the Commission directs
the settlement coordinator to discourage dilatory behavior by the
parties and to notify the Commission as soon as possible if he
determines that negotiations between the parties are unlikely to be
fruitful. The settlement coordinator shall file a report on the
progress of settlement not later than 20 days after the issuance of
this Order.
Should the parties fail to agree on an appropriate remedy, the
Commission will rule on the GameFly Motion and will proceed with all
reasonable dispatch to complete the remand proceeding and satisfy its
obligation ``either to remedy all discrimination or to explain why any
discrimination it left in place was due or reasonable under Sec.
403(c).'' 704 F.3d at 148. Whether further administrative proceedings
will be needed to create a record adequate to support the remedy
ultimately selected by the Commission is a matter that will be
determined by further order of the Commission.
It is ordered:
1. The Commission convenes a settlement conference at its offices
at 10:00 a.m. on April 23, 2013, for the purpose of reaching agreement
on a remedy of the undue discrimination previously found to exist by
Order No. 718.
2. The Commission directs GameFly and the Postal Service to
immediately engage in settlement negotiations with the goal of
expeditiously resolving this controversy based on the potential
remedies and considerations discussed in this Order.
3. The Commission appoints James Waclawski as settlement
coordinator concerning the settlement discussions ordered herein and to
coordinate those discussions.
4. The Commission directs the settlement coordinator to file a
report not later than 20 days after the date of this order.
5. Emmett Rand Costich, previously appointed in this proceeding as
Public Representative, shall continue in that capacity to represent the
interests of the general public.
6. The Commission directs the Secretary of the Commission to
arrange for publication of this Order in the Federal Register.
Appendix--Summary Descriptions of Potential Remedies
I. GameFly Proposed Remedies
a. Equal Rate Treatment
Rates for letter- and flat-shaped DVD mail at the First-Class
Mail letter rate would be equalized either at the current first
ounce letter rates or at rates higher than the First-Class Mail
letter rate.
b. An Equal Contribution Remedy
An equal contribution remedy would reduce rates for flat-shaped
DVD mail to a level that would produce an equal contribution for
letter- and flat-shaped DVD mail. The Commission rejected GameFly's
proposed equal contribution remedy, in part, on the limitations of
the then-current record.\8\ This option may require the parties to
develop supplemental or revised cost data to address the
deficiencies of the then-record data.
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\8\ Order No. 718 at 112, ] 5019 (``Even if the Commission were
to accept GameFly's contention that the cost differences do not
justify the extent of the difference in rates paid by the mailers,
such estimates are not sufficiently accurate to be used to design a
rate for flat-shaped round-trip DVD mailers in the manner suggested
by GameFly's rate-based remedy.'').
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II. Postal Service Proposed Remedy
A remedy that would require an explanation of why any residual
discrimination is due or reasonable, such as the Commission's
original remedy. This would preserve the remedy adopted in Order No.
718, permitting DVD mailers either to send one-ounce letter-shaped
mail without paying a non-machinable surcharge or to send flat-
shaped mail of up to two-ounces at the applicable one-ounce single-
piece First-Class flat rates. Order No. 718 at 1-2. This remedy
could require the Commission to provide a more extensive and
persuasive explanation of the rationale for any remaining
discrimination in order to withstand further appellate review.
III. Remedies Identified by the Commission
a. Retain the Letter Round-Trip DVD Mailer and Flat Round-Trip
DVD Mailer categories, impose a requirement that the Postal Service
manually process all letter-shaped DVD mail, and establish an
enforcement mechanism to ensure manual processing is occurring at a
certain level.
This remedy would retain the Letter Round-Trip Mailer and Flat
Round-Trip Mailer categories and rates as established in Order No.
718. It would require the Postal Service to provide manual
processing for all letter-shaped DVD mail and it would establish an
enforcement mechanism to ensure that a certain level of manual
processing was in fact provided. Mailers who are satisfied with the
prescribed level of manual processing could send their DVDs as
letter mail. Mailers who are not satisfied with the prescribed level
of manual processing could send DVDs as flats and would get the
second ounce free. If this remedy were adopted, mailers could choose
the type of mail service that gives them the level of protection
they desire.
b. An operational remedy that would eliminate all special
treatment of DVDs and impose rates that apply to the mailpiece, e.g.
the non-machinable surcharge and second ounce rates.
This remedy eliminating all special treatment of DVDs would
require the Postal
[[Page 23790]]
Service to collect a non-machinable surcharge on all letter-shaped
DVD mail. The Letter Round-Trip Mailer and Flat Round-Trip Mailer
categories established in Order No. 718 would be eliminated and the
Postal Service would impose the full charge for the second ounce of
First-Class DVD flats mail.
c. An operational remedy that would require manual handling of
all letter-shaped DVDs subject to certain standards.
The remedy would require the Postal Service to provide uniform
manual processing to all letter-shaped DVD mail, e.g., the type
afforded Netflix's mail. The non-machinable surcharge would not be
imposed. However, the Letter Round-Trip Mailer and Flat Round-Trip
Mailer categories would not be retained. While manual processing of
DVD letter mail would be made available to all mailers on a non-
discriminatory basis, it nevertheless would recognize that
operational factors can affect the feasibility of providing manual
processing at any point in time and that individual mailers cannot
be guaranteed the exact same level of manual processing. This
recognition that manual processing levels may fluctuate and vary
from mailer to mailer distinguishes this operational remedy from the
GameFly operational remedy that would require that each mailer
receive the same level of manual processing. Enforcement of the
requirement that such manual processing be provided on a non-
discriminatory basis could be facilitated by requiring the Postal
Service to monitor and report manual processing levels, e.g., based
on IMb scans.
Appendix--Summary Descriptions of Potential Remedies
I. GameFly Proposed Remedies
a. Equal Rate Treatment
Rates for letter- and flat-shaped DVD mail at the First-Class
Mail letter rate would be equalized either at the current first
ounce letter rates or at rates higher than the First-Class Mail
letter rate.
b. An Equal Contribution Remedy
An equal contribution remedy would reduce rates for flat-shaped
DVD mail to a level that would produce an equal contribution for
letter- and flat-shaped DVD mail. The Commission rejected GameFly's
proposed equal contribution remedy, in part, on the limitations of
the then-current record.\9\ This option may require the parties to
develop supplemental or revised cost data to address the
deficiencies of the then-record data.
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\9\ Order No. 718 at 112, ] 5019 (``Even if the Commission were
to accept GameFly's contention that the cost differences do not
justify the extent of the difference in rates paid by the mailers,
such estimates are not sufficiently accurate to be used to design a
rate for flat-shaped round-trip DVD mailers in the manner suggested
by GameFly's rate-based remedy.'').
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II. Postal Service Proposed Remedy
A remedy that would require an explanation of why any residual
discrimination is due or reasonable, such as the Commission's
original remedy. This would preserve the remedy adopted in Order No.
718, permitting DVD mailers either to send one-ounce letter-shaped
mail without paying a non-machinable surcharge or to send flat-
shaped mail of up to two-ounces at the applicable one-ounce single-
piece First-Class flat rates. Order No. 718 at 1-2. This remedy
could require the Commission to provide a more extensive and
persuasive explanation of the rationale for any remaining
discrimination in order to withstand further appellate review.
III. Remedies Identified by the Commission
a. Retain the Letter Round-Trip DVD Mailer and Flat Round-Trip
DVD Mailer categories, impose a requirement that the Postal Service
manually process all letter-shaped DVD mail, and establish an
enforcement mechanism to ensure manual processing is occurring at a
certain level.
This remedy would retain the Letter Round-Trip Mailer and Flat
Round-Trip Mailer categories and rates as established in Order No.
718. It would require the Postal Service to provide manual
processing for all letter-shaped DVD mail and it would establish an
enforcement mechanism to ensure that a certain level of manual
processing was in fact provided. Mailers who are satisfied with the
prescribed level of manual processing could send their DVDs as
letter mail. Mailers who are not satisfied with the prescribed level
of manual processing could send DVDs as flats and would get the
second ounce free. If this remedy were adopted, mailers could choose
the type of mail service that gives them the level of protection
they desire.
b. An operational remedy that would eliminate all special
treatment of DVDs and impose rates that apply to the mailpiece, e.g.
the non-machinable surcharge and second ounce rates.
This remedy eliminating all special treatment of DVDs would
require the Postal Service to collect a non-machinable surcharge on
all letter-shaped DVD mail. The Letter Round-Trip Mailer and Flat
Round-Trip Mailer categories established in Order No. 718 would be
eliminated and the Postal Service would impose the full charge for
the second ounce of First-Class DVD flats mail.
c. An operational remedy that would require manual handling of
all letter-shaped DVDs subject to certain standards.
The remedy would require the Postal Service to provide uniform
manual processing to all letter-shaped DVD mail, e.g., the type
afforded Netflix's mail. The non-machinable surcharge would not be
imposed. However, the Letter Round-Trip Mailer and Flat Round-Trip
Mailer categories would not be retained.
While manual processing of DVD letter mail would be made
available to all mailers on a non-discriminatory basis, it
nevertheless would recognize that operational factors can affect the
feasibility of providing manual processing at any point in time and
that individual mailers cannot be guaranteed the exact same level of
manual processing. This recognition that manual processing levels
may fluctuate and vary from mailer to mailer distinguishes this
operational remedy from the GameFly operational remedy that would
require that each mailer receive the same level of manual
processing. Enforcement of the requirement that such manual
processing be provided on a non-discriminatory basis could be
facilitated by requiring the Postal Service to monitor and report
manual processing levels, e.g., based on IMb scans.
By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2013-09373 Filed 4-19-13; 8:45 am]
BILLING CODE 7710-FW-P