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C.D. OF NYC INC. v. UNITED STATES POSTAL SERVICE

C.D. OF NYC INC., and D.J. OF AMERICA, INC., d/b/a DIAJEWEL OF AMERICA, Plaintiffs,
v.
UNITED STATES POSTAL SERVICE, Defendant.



The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge

OPINION and ORDER

Background

Plaintiffs are diamond and jewelry merchants in Manhattan. Plaintiffs claim that two of their own employees conspired with two employees of the United States Postal Service ("U.S.P.S." or "Postal Service") to convert plaintiffs' jewelry. According to the complaint, plaintiffs' two employees would deliver packages of jewelry, along with an original and one copy of a manifest, to the Rockefeller Center Post Office, and the two Postal Service employees would accept the packages on behalf of the Postal Service. The Postal Service employees would indicate receipt of all packages listed on the original manifest, and the plaintiffs' employees would return that manifest to plaintiffs. However, on the duplicate manifest kept in U.S.P.S. records, the Postal Service employees would strike some of the packages and then would keep those packages for themselves. This conduct allegedly continued for nearly two years, resulting in approximately $1.5 million in jewelry never reaching plaintiffs' customers.

  Plaintiffs bring claims for conversion, money had and received, unjust enrichment, negligent supervision, concerted action, and civil conspiracy. Plaintiffs seek $1.5 million in damages, plus attorneys' fees, costs, expenses, and disbursements.

  The U.S.P.S. moves to dismiss plaintiffs' claims for lack of subject matter jurisdiction pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(h)(3), and for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6). For the reasons that follow, the Postal Service's motion is granted and plaintiffs' claims are dismissed.

  I. 12(b)(1) and 12(b)(6) Standards

  Federal Rule of Civil Procedure 12(b)(1) provides for the dismissal of a complaint when the federal court lacks jurisdiction over the subject matter. Because a lack of subject matter jurisdiction renders other defenses moot, a court usually gives first consideration to a motion to dismiss under Rule 12(b)(1). Friedman v. United States, No. 01 Civ. 7518 (LTS) (RLE), 2003 WL 1460525 at *5 (S.D.N.Y. Mar. 18, 2003); Prestop v. Hamlett, No. 99 Civ. 2747 (GBD), 2001 WL 363676 at *6 (S.D.N.Y. Apr. 12, 2001). Where the defendant challenges the legal, and not the factual, sufficiency of the plaintiff's jurisdictional allegations, the district court takes all facts alleged in the complaint as true, and draws all reasonable inferences in favor of the plaintiff. Robinson v. Gov't of Malaysia, 269 F.3d 133, 140 (2d Cir. 2001) (citations omitted). However, when jurisdictional facts are called into question, id., "jurisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it." Shipping Fin. Servs. Corp. v. Drakos, 140 F.3d 129, 131 (2d Cir. 1998) (citation omitted); Smith v. Potter, 208 F. Supp. 2d 415, 417 (S.D.N.Y. 2002) (citations omitted).

  On review of a motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(6), a court must accept the plaintiff's allegations of fact as true, and must draw all reasonable inferences in the plaintiff's favor. Potter, 208 F. Supp. 2d at 417 (citations omitted).

  II. Sovereign Immunity, Consent to Suit, and Exceptions

  Under the principle of sovereign immunity, "the United States may not be sued without its consent and . . . the existence of consent is a prerequisite for jurisdiction." Adeleke v. United States, 355 F.3d 144, 150 (2d Cir. 2004) (citations omitted); see Guccione v. United States, 670 F.Supp. 527, 529 (S.D.N.Y. 1987). Pursuant to the Federal Tort Claims Act ("FTCA"), 28 U.S.C. §§ 1346, 2671 et seq., the United States has consented to suit under certain limited circumstances:
[The district courts] shall have exclusive jurisdiction of civil actions on claims against the United States, for money damages, . . . for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred. 28 U.S.C. § 1346(b)(1). As a further limitation to the scope of consent, § 2680 of the FTCA enumerates various exceptions to the waiver of sovereign immunity, including § 2680(b) (the "Postal Matter Exception") and § 2680(h) (the "Intentional Torts Exception"). Because the United States' consent to suit is a prerequisite for jurisdiction, claims that fall within the enumerated exceptions, or claims that do not satisfy the requirements of § 1346(b)(1), must be dismissed for lack of subject matter jurisdiction. See Dorking Genetics v. United States, 76 F.3d 1261, 1263-64 (2d Cir. 1996); Birnbaum v. United States, 588 F.2d 319, 322 (2d Cir. 1978).
  Congress has also waived the Postal Service's sovereign immunity by providing, in the Postal Reorganization Act ("PRA"), that the Postal Service may "sue and be sued." 39 U.S.C. § 401(1). However, the scope of that waiver of immunity is not without limits with respect to tort claims. Specifically, § 409(c) of the PRA limits the § 401(1) waiver by providing that any tort claim against the Postal Service is subject to the remedies and restrictions of the FTCA. 39 U.S.C. § 409(c) ("[The FTCA] shall apply to tort claims arising out of activities of the Postal Service."); see Smith v. Potter, 187 F. Supp. 2d 93, 98 (S.D.N.Y. 2001); see also Loeffler v. Frank, 486 U.S. 549, 557, 108 S. Ct. 1965, 1970, 100 L. Ed. 2d 549 (1988) ("Congress expressly included several . . . specific limitations on the operation of the sue-and-be-sued clause [including § 409]."); Franchise Tax Bd. v. United States Postal Serv., 467 U.S. 512, 519, 104 S. Ct. 2549, 2553, 81 L. Ed. 2d 446 (1984) (noting the applicability of the FTCA to the Postal Service via § 409(c)); Active Fire Sprinkler Corp. v. United States Postal Serv., 811 F.2d 747, 753 (2d Cir. 1987) ("One might note that the PRA also incorporated the provisions of the [FTCA]. And by doing so, Congress explicitly has narrowed the waiver of immunity contained in the `sue or be sued' clause of section 401(1)." (citations omitted)). Tort claims brought against the Postal Service, therefore, are subject to the limitations on sovereign immunity expressed in the FTCA.

  A. Postal Matter Exception

  Under 28 U.S.C. § 2680(b), the government's waiver of sovereign immunity in the FTCA does not extend to "[a]ny claim arising out of the loss, miscarriage, or negligent transmission of letters or postal matter." The Court of Appeals for the Second Circuit analyzed this provision in Marine Insurance Co. v. United States, 387 F.2d 812 (2d Cir. 1967), a case involving a package of jewels that "was stolen while it was in the normal flow of mail" by a federal employee. Id. at 813, 815. The employee was apprehended and convicted, and the Second Circuit held that the Postal Matter Exception barred the plaintiff's claim for recovery against the United States. Id. at 813-14. The Second Circuit, in Birnbaum, specifically upheld the decision in Marine Insurance: "The claim in Marine Insurance was . . . [for the] "loss" [of the package] from the postal system," and therefore "fell within the postal exception." Birnbaum, 588 F.2d at 328 n. 20.

  The relevant facts in this case are indistinguishable from the facts in Marine Insurance. As in Marine Insurance, the plaintiffs' packages were allegedly stolen from the mails and thus all plaintiffs' claims fall squarely within the Postal Matter Exception. For this reason alone the Court lacks jurisdiction over all ...


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