The opinion of the court was delivered by: Motley, District Judge.
[EDITOR'S NOTE: THIS PAGE CONTAINED AND ARE
NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT
OPINION ON SUMMARY JUDGMENT
The United States of America, on behalf of the United States
Postal Service, alleges that Raymond & Whitcomb Co.
(hereinafter, "R & W") illegally used the non-profit mail rate
for 6.1 million mailings not eligible for that rate, causing
the Postal Service to suffer a deficiency of $398,960.05. The
United States has brought this civil action under the Federal
Debt Collection Procedure Act, 31 U.S.C. § 3001 et seq. (Count
I), unjust enrichment common law (Count II), and the False
Claims Act, 31 U.S.C. § 3729 et seq. (Count III). The United
States seeks actual damages, treble damages, and a civil
penalty of at least $5,000 for each of 753 false mailing
statements. Both parties have moved for summary judgment. For
the reasons given below, summary judgment is granted to the
United States on Count I (Federal Debt Collection Procedure
Act) and Count II (unjust enrichment). Summary judgment is
denied to both parties in all other respects.
Except as otherwise noted, the facts in this section are
undisputed. R & W, a New York corporation, is a commercial
travel agency that specializes in cruises and tours for
institutional clients and their members. Compl. ¶ 6; Answer ¶
6. R & W works almost exclusively with non-profit institutions,
such as the Metropolitan Museum of Art (hereinafter, "Met") and
the Smithsonian Institution (hereinafter, "Smithsonian")
(collectively, "Institutions"), on travel programs that advance
their educational missions. Def.'s R. 56.1 Stmt. ¶ 2.*fn1 R &
W does not provide conventional retail travel services to the
public. Def.'s R. 56.1 Stmt. ¶ 1.
From November 1, 1992 to August 31, 1996 (hereinafter,
"complaint period"), R & W played a role in the operation of
each Institution's travel tour programs. Pl.'s R. 56.1 Stmt.
¶ 1. Targeting its members, each Institution made its tours
educational in focus. "The objective of the Smithsonian study
tour program is to provide special opportunities for
Smithsonian members to learn about the history and culture of
other areas of the world through travel with scholars and
authorities provided by the Institution. . . . The focus of a
Smithsonian study tour is educational." Def.'s R. 56.1 Stmt. ¶¶
4, 26. "The Metropolitan travel program is essentially the same
as the Smithsonian study tour program, with education of
Metropolitan members and the advancement of the educational
mission of the Metropolitan as its goal." Def.'s R. 56.1 Stmt.
¶ 30. The Smithsonian tours are available only to its members,
with Smithsonian personnel dictating the basic tour blueprint,
helping staff the tour, and scrutinizing and approving all
aspects of the tour. Def.'s R. 56.1 Stmt. ¶¶ 6-8, 11-15, 18-19,
22. "The Metropolitan has final approval over every facet of
its travel program." Def.'s R. 56.1 Stmt. ¶¶ 31-32. The Met
tours were at least "primarily for members" of the Met, and
members were the targets of the brochure mailings that the Met
directed. Compl. ¶ 21; Def.'s R. 56.1 Stmt. ¶ 32.
R & W's work for the tour programs included the following:
helping plan itineraries; procuring and paying for cruise ship,
hotel, and tour reservations; hiring travel staff; and, in the
actions at issue here, printing and mailing brochures and tour
bulletins (hereinafter, "disputed mailings"). Pl.'s R. 56.1
Stmt. ¶¶ 7-9. R & W's financial gain or loss from its work with
the Institutions depended on the number of paying participants
in the tours. Pl.'s R. 56.1 Stmt. ¶¶ 10-13. R & W had each tour
priced so as to earn R & W a profit, and most tours generated a
profit of $100,000 to $300,000 for R & W. Pl.'s R.
56.1 Stmt. ¶¶ 11-14. R & W also bore a risk of financial loss
when trips were canceled, and at least one canceled tour did
cause R & W to suffer a loss. Pl.'s R. 56.1 Stmt. ¶¶ 10, 13.
The disputed mailings included 6.1 million pieces of mail in
753 separate submissions to the Postal Service during the
complaint period. Pl.'s R. 56.1 Stmt. ¶¶ 2, 3.*fn2 For the
disputed mailings, R & W paid the postage as well as the costs
of printing the brochures and bulletins. Pl.'s R. 56.1 Stmt. ¶¶
6, 7. R & W hired St. John Associates, Inc. (hereinafter,
"St.John"), a mailing agent, to submit the mailings to the
Postal Service. Pl.'s R. 56.1 Stmt. ¶ 15. All disputed mailings
were mailed at the non-profit standard mail rate (formerly, the
special bulk third-class rate) (hereinafter, "non-profit
rate"), which is available only to authorized non-profit
organizations such as the Institutions. Pl.'s R. 56.1 Stmt. ¶
4. At the non-profit rate, postage for the disputed mailings
was $398,960.05 cheaper than it would have been at the regular
third-class bulk rate. Pl.'s R. 56.1 Stmt. ¶ 5.
For each of the 753 submissions, St. John signed the required
Postal Service mailing statement claiming that, under
applicable Postal Service regulations, the mailed material was
eligible for the non-profit rate. Pl.'s R. 56.1 Stmt. ¶¶ 3, 17,
18. St. John, acting in accord with instructions it received
from R & W, claimed such eligibility by listing either the Met
or the Smithsonian, but not R & W, as the holder of the
non-profit permit that allowed the use of the non-profit rate.
Pl.'s R. 56.1 Stmt. ¶¶ 16, 19, 20. While the Met and the
Smithsonian each had such a permit, R & W, which was not a
non-profit entity, never did. Pl.'s R. 56.1 Stmt. ¶¶ 19, 22.
St. John sent, along with its own invoice, each mailing
statement to R & W. Pl.'s R. 56.1 Stmt. ¶ 21.
By 1991, R & W knew of the Postal Service regulations on
cooperative mailings and knew that the Postal Service had
investigated the eligibility for the non-profit rate of Met and
Smithsonian travel mailings. Pl.'s R. 56.1 Stmt. ¶¶ 24, 25. R &
W argues that these Postal Service investigations vindicated
the sort of travel-related mailings at issue here. Def.'s Resp.
to Pl.'s R. 56.1 Stmt. ¶¶ 26. R & W asserts that in hiring and
instructing St. John, it merely acted on behalf of, and under
instructions from, the Institutions to help the Institutions
mail brochures to their own members under their own non-profit
mailing permits. Def.'s Resp. to Pl.'s R. 56.1 Stmt. ¶¶ 15-16,
A. Summary Judgment Standards
The basic summary judgment standard is that "[u]ncertainty as
to the true state of any material fact defeats the motion."
Gibson v. Am. Broad. Cos., 892 F.2d 1128, 1132 (2d Cir. 1989).
The non-moving party's burden is to produce concrete evidence
sufficient to establish a genuine unresolved material issue of
material fact. See Celotex Corp. v. Catrett, 477 U.S. 317,
322-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); Dister v.
Continental Group, Inc., 859 F.2d 1108, 1114 (2d Cir. 1988).
The court then must view the facts in the light most favorable
to the non-movant. See Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538
(1986); Gallo v. Prudential Residential Servs., Ltd.
Partnership, 22 F.3d 1219, 1224 (2d Cir. 1994). The court
neither weighs evidence nor resolves material factual issues,
but only determines whether, after adequate discovery, any such
issues remain unresolved because a reasonable fact finder could
decide for either
party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249,
106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); Gibson, 892 F.2d at
B. Prohibition on Using Non-Profit Rate for Cooperative
Each Institution, a non-profit entity, qualifies for the
non-profit rate; R & W, a for-profit commercial entity, does
not. The Domestic Mail Manual (hereinafter, "DMM"),*fn3 which
is adopted as a Postal Service regulation, see 39 C.F.R. §§
111.1, 111.5, 211.2(a)(2), prohibits use of the non-profit rate
when the mailings are for a cooperative venture between a
non-profit and a for-profit entity. "An organization authorized
to mail at the Nonprofit Standard Mail rates may mail only its
own matter at those rates. An authorized organization may not
lend the use of its authorization to mail at the Nonprofit
Standard Mail rates to any other person or organization." DMM §
E670.5.1. "No person or organization may mail, or cause to be
mailed . . ., any ineligible matter at the Nonprofit Standard
Mail rates." DMM § E670.5.2. "A cooperative mailing may be made
at the Nonprofit Standard Mail rates only when each of the
cooperating organizations individually is authorized." DMM §
E670.5.3. See also Siebert v. Conservative Party of N.Y.,
724 F.2d 334, 335-36 (2d Cir. 1983) ("An organization which
qualifies for the special rates may only mail its own matter at
these rates. Moreover, cooperative mailings may only be made at
the special rates when each organization individually qualifies
for the use of the special rates.") (citing DMM).
The question is whether the disputed mailings were truly the
mailings of each Institution or instead were cooperative
mailings of each Institution in conjunction with R & W.*fn4 R
& W asserts that it was not a joint venturer with the
Institutions, but merely their agent, aiding in the execution
of non-profit activities that the Institutions controlled. The
cooperative mailing inquiry certainly looks to traditional
agency principles. See Richards Decl. Ex. A, Customer Support
Ruling PS-209, July 1989, updated Oct. 1996 (hereinafter,
"PS-209") ("A cooperative mailing may be considered proper if
the authorized organization uses a for-profit entity . . . as
an agent."). "[T]raditional indicia of an agency relationship
include `(1) consent; (2) fiduciary duty; (3) absence of gain
or risk to the agent; and (4) control by the principal.'"
Berger v. Iron Workers Reinforced Rodmen Local 201, et al.,
843 F.2d 1395, n. 29 (C.A.D.C. 1988) (citation omitted). ...