Loeffler v. Tisch Reply Brief for the Petitioner

    No. 86-1431

In T he

Supreme (Ernirt of ttje United States
October Term, 1987

T heodore J. Loeffler, 
Petitioner,

vs.

P reston R. T isch, P ostmaster General 
O f The U nited States, 

Respondent.

On Writ of Certiorari to the 
United States Court of Appeals For the Eighth Circuit

REPLY BRIEF FOR THE PETITIONER

L isa S. Van A mburg 
Schuchat, Cook & Werner 
1221 Locust St., Suite 250 
St. Louis, Missouri 63103 
(314) 621-2626
Counsel o f  Record 
December, 1987

St. Louis Law Printing Co., Inc., 13305 Manchester Road 63131 314-231-4477



TABLE OF CONTENTS

Page

Table of Contents ............................................................ i

Table of Authorities ........................................................  ii

A rgum ent.........................................................................  1

I. Section 717 Of Title VII Is Not A Delimita­
tion Of The Postal Service’s General Authori­
ty To “ Sue And Be Sued.” .............................  1

II. An Award Of Prejudgment Interest Against
The Postal Service Would Not Be “ Inconsis­
tent With The Statutory Scheme.” ................ 3

Conclusion ....................................................................... 8



TABLE OF AUTHORITIES

Page(s)

Cases:

Federal Housing Administration v. Burr, 309 U.S. 242
(1940).......................................................................  1,4,6

Franchise Tax Board v. United States Postal Service,
467 U.S. 512(1984)..................................................  4

Kiefer and Kiefer v. Reconstruction Finance Corp.,
306 U.S. 381 (1939)..................................................  5

Library of Congress v. Shaw,___ U.S--------- 106 S.Ct.
2957(1986)...............    3

Philadelphia Gear Corp. v. Federal Deposit Insurance
Corp., 752 F.2d 1131 (10th Cir. 1984) ...................  7

Queen v. Tennessee Valley Authority, 689 F.2d 80 (6th
Cir. 1982).................................................................  6

Statutes:

Civil Rights Act of 1964: Title VII, 42 U.S.C. 2000e et 
seq. Sec. 717, 42 U.S.C. 2000e-16 (Pub. L. No.
92-261, Sec. 11, 86Stat. I l l ) ..................................... passim

Federal Tort Claims Act: 28 U.S.C. 2679(a)..........    2

Postal Reorganization Act: 39 U.S.C. (and Supp. Ill)
101 et seq.....................................................................passim

ii



No. 86-1431
In The

Supreme Court of tire llnitcb States
October Term, 1987

Theodore J. Loeffler, 
Petitioner,

vs.

P reston R. T isch, P ostmaster General 
Of The United States, 

Respondent.

On Writ of Certiorari to the 
United States Court of Appeals For the Eighth Circuit

REPLY BRIEF FOR THE PETITIONER

ARGUMENT

I. Section 717 Of Title YII Is Not A Delimitation Of 
The Postal Service’s General Authority To “ Sue And 
Be Sued.”

Under the “ liberal construction rule” articulated first in 
Federal Housing Administration v. Burr, 309 U.S. 242 (1940), 
“ sue and be sued” agencies may be liable for prejudgment in­
terest as a normal incident of suit. See Brief of Petitioner at 10 
n.5. Yet the Postal Service contends that its general authority to 
“ sue and be sued” is somehow delimited by the language of 
Section 717 of the 1972 amendments to Title VII and therefore,



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the Postal Service is not liable for prejudgment interest in the 
same way a private enterprise would be. The reasoning of the 
Postal Service is that since all federal agencies are subject to the 
same administrative and judicial scheme for processing charges 
under Title VII, all federal agencies, regardless of “ sue and be 
sued status” are immune from interest awards incidental to 
back pay awarded under Title VII. This leap of logic falls short 
of its mark.

First, there is no express language in Title VII or the 
legislative history of the 1972 amendments, delimiting the 
authority of “ sue and be sued” clauses in the charters of certain 
federal agencies. Had Congress intended to delimit the scope of 
the status waiver of immunity effected by the Postal Service’s 
“ sue and be sued” clause, it would have so stated in the 
language of Section 717 or elsewhere in Title VII. This is 
precisely what Congress did in another substantive waiver, the 
Federal Tort Claims Act:

The authority of any federal agency to sue and be sued in 
its own name shall not be construed to authorize suits 
against such federal agency on claims which are cognizable 
under Section 1346(b) of this title, and the remedies pro­
vided by this title in such cases shall be exclusive.

28 U.S.C. 2679(a) (emphasis added). In Section 2679(a), Con­
gress expressly recognized that a “ sue and be sued” clause is a 
separate source of authority, apart from the substantive waiver 
statute itself, not only for certain types of suit but also for cer­
tain types o f  remedies. Against the backdrop of the “ liberal 
construction rule” regarding the scope of the waiver of immuni­
ty effected by “ sue and be sued” clauses, Congress 
acknowledges the separate authority and status of sue and be 
sued agencies and clarifies the exclusivity of the Federal Tort 
Claims Act remedies vis-a-vis these agencies. Yet there is no 
parallel language in Title VII. Given the long-standing and con­
tinued viability of the “ liberal construction rule,” it is



reasonable to conclude that had Congress intended to delimit 
the general authority of the “ sue and be sued” clause in the 
Postal Service charter or that of other such agencies, Congress 
would have placed in the 1972 amendments to Title VII 
language similar to that expressed in the Federal Tort Claims 
Act. Congress’ silence in Title VII regarding the issue of pre­
judgment interest is not surprising given the “historical view 
that interest is an element of damages separate from damages on 
the substantive claim.” Library o f  Congress v. Shaw, 106 S.Ct. 
2957, 2961 (1986) (quoting C. McCormick, Damages Sec. 50, p. 
205 (1935)). Yet, Congress’ silence in Title VII regarding “ sue 
and be sued” agencies is more instructive given Congress’ ex­
perience in legislating against a backdrop of the well-settled 
“ liberal construction rule.”

Second, if the language of Section 717 requires this Court to 
apply the no-interest rule indiscriminately to all federal agen­
cies, regardless of “ sue and be sued” status, then this Court’s 
recent acknowledgement in the Title VII decision of Library o f  
Congress v. Shaw, of the inapplicability of the no-interest rule 
to certain federal agencies seems superfluous:

The no-interest rule is similarly inapplicable where the 
Government has cast off the cloak of sovereignty and 
assumed the status of a private commercial enterprise.

Library of Congress v. Shaw, 106 S.Ct. 2957, 2963, n.5 (1986) 
(citation omitted). Under the Postal Service’s analysis, there is 
no federal agency under Title VII which does not enjoy the 
benefit of the “no interest rule.” The Postal Service’s analysis 
is impossible to reconcile with footnote 5 of the Shaw opinion.

II. An Award Of Prejudgment Interest Against The 
Postal Service Would Not Be “ Inconsistent With The 
Statutory Scheme.”

The Postal Service acknowledges the viability of the “ liberal 
construction rule” articulated by the Supreme Court in inter­



— 4 —

preting the scope of “ sue and be sued” clauses in the charters of 
federal agencies. See Brief for the Respondent at 17. The 
Postal Service concedes that as a “ sue and be sued agency” 
engaged in commercial enterprise, its liabilities are presumed to 
be the same as that of a private enterprise. See id; Franchise 
Tax Board v. United States Postal Service, 467 U.S. 512, 519 
(1984). At the same time, however, the Postal Service seeks to 
overcome this presumption of equivalent liability by fitting 
itself within one or more exceptions to the liberal construction 
rule articulated by the Supreme Court in Federal Housing A d­
ministration v. Burr:

Rather, if the general authority to “ sue and be sued” is to 
be delimited by implied exceptions, it must be clearly 
shown that certain types of suits are not consistent with the 
statutory or constitutional scheme, that an implied restric­
tion of the general authority is necessary to avoid grave in­
terference with the performance of a governmental func­
tion, or that for other reasons it was plainly the purpose of 
Congress to use the “ sue and be sued” clause in a narrow 
sense. In the absence of such showing, it must be presum­
ed that when Congress launched a governmental agency in­
to the commerical world and endowed it with authority to 
“ sue and be sued,” that agency is not less amenable to 
judicial process than a private enterprise under like cir­
cumstances would be.

309 U.S. 242, 245.

First, the Postal Service argues that prejudgment interest is 
not consistent with “ the statutory or constitutional scheme.” 
The Postal Service then characterizes the relevant “ statutory 
scheme” as Section 717, Title VII. Clearly, however, the 
statutory scheme contemplated by the Court in Federal Housing 
Administration v. Burr was the series of related “ sue and be 
sued” statutes enacted by Congress during the New Deal era. 
Even afterwards, Congress continued to charter new “ sue and



5

be sued agencies.” The Court discussed this statutory scheme in 
the first of a trilogy of cases, Kiefer and Kiefer v. Reconstruc­
tion Finance Corp., 306 U.S. 516, 518 (1939). In its discussion 
of the scope of the waiver of immunity Comgress effected for 
the Regional Agricultural Credit Corporation, the Court states 
as follows:

It is not a textual problem; for Congress has not expressed 
its will in words. Congress may not even have an con­
sciousness of intention. The Congressional will must be 
divined, and by a process of interpretation which, in ef­
fect, is the ascertainment of policy immanent not merely in 
the single statute from which flow the rights and respon- 
siblities of Regional, but in a series o f statutes utilizing cor­
porations for governmental purposes and drawing 
significance from dominant, contemporaneous opinion 
regarding the immunity of governmental agencies from 
suit.

Id. (emphasis added).

Justice Frankfurter’s mode of analysis was to look at the 
scheme of status waiver statutes as an aid to interpreting the 
scope of the waiver effected by a particular sue and be sued 
clause. If the definition of the scope of that waiver is somehow 
inconsistent with the series of sue and be sued status waiver 
statutes, then the waiver has been improperly delimited or ex­
panded. In this case, however, the Postal Service characterizes 
Section 717 as the “ statutory scheme” to look to for aid in in- 
tepreting the scope of the waiver defined by the Postal Services’ 
charter. This is an improper mode of analysis and certainly not 
the method contemplated by the Supreme Court in the trilogy of 
status waiver decisions. It is the policy behind the scheme of 
these status waiver statutes which serves as a guide for inter­
pretation, not the policy behind the administrative enforcement 
scheme of Section 717.



6

Naturally, if Congress had spoken to either the issue of in­
terest or “ sue and be sued” agencies in Title VII, then the Court 
would have some express indication of Congress’ intent regard­
ing the interplay of the enabling statutes of sue and be sued 
agencies and Section 717. No such language appears, however, 
in Title VII. Therefore, it stretches logic to assert that Congress 
even contemplated any interplay between these two statutes, 
regarding immunity of the Postal Service.

The Postal Service in its Brief also suggests that imposing pre­
judgment interest under Title VII would gravely interfere with 
its governmental function — another exception to the liberal 
construction rule articulated by the Supreme Court in Federal 
Housing Administration v. Burr. See Brief for the Respondent 
at 18 n.9. The Postal Service argues that the language of Sec­
tion 717 indicates that Congress “viewed the relationship be­
tween the Postal Service and its employees to have a govern­
mental, rather than a private and commercial nature.” Id. The 
Postal Service’s argument seriously distorts the distinctions the 
lower federal courts have drawn between proprietary and 
governmental functions when discussing the scope of a status 
waiver. This distinction is sometimes drawn to show that it was 
plainly the purpose of Congress to use the “ sue and be sued” 
clause in a narrow sense. For example, with respect to the 
Federal Deposit Insurance Corporation, the lower courts have 
recognized that Congress intended the “ sue and be sued” clause 
in its charter to be narrowly construed with respect to certain of 
its governmental, as opposed to proprietary functions.1 The ra­

1 See, e.g. Philadelphia Gear Corp. v. Federal Deposit Insurance 
Corp., 752 F.2d 1131 (10th Cir. 1984) (court refused to allow the 
award of prejudgment interest against the FDIC acting in its capacity 
as an insurer for delays in paying insurance claims, since Congress had 
expressly recognized such delays would occur and thereby did not 
waive FDIC’s immunity to prejudgment interest).



— 7

tionale for drawing this distinction is that in certain limited 
situations, the “ sue and be sued” agency is exempt from liabili­
ty arising out of the exercise of certain wholly governmental 
functions where the agency acts solely as the government’s agent 
and where the United States itself would not be liable. See, e.g. 
Queen v. Tennessee Valley Authority, 689 F.2d 80, 86 (6th Cir. 
1982). As previously stated in Petitioner’s Brief, the lower 
federal courts have not noted such a distinction in the legislative 
history of the Postal Reorganization Act or in the Act itself. 
The Postal Service asserts that as an employer, it is engaging in a 
governmental and not a commercial function. This mode of 
analysis splits the identity of the Postal Service for various pur­
poses but does not look to the basic function of the agency as a 
commerical one, providing services to the public. The Postal 
Service is clearly engaged in commercial enterprise. Its internal 
operations and its employer-employee relationships are an­
cillary to its overall identity as a private-like agency which has 
been launched by Congress into the commerical world. Again, 
neither the enabling statute nor the legislative history of the 
Postal Reorganization Act or Section 717 contains language in­
dicating a plain intent of Congress to use the Postal Service’s 
“ sue and be sued” clause in a narrow sense. Consequently, 
none of the exceptions to the liberal construction rule can 
logically be applied here. Any attempt to do so would be basing 
inferences upon inferences and not upon the express language 
or legislative history of Title VII or the Postal Reorganization 
Act.



— 8 —

CONCLUSION

Accordingly, for all of the above reasons, Petitioner prays 
this Honorable Court to reverse the decision of the Court of 
Appeals and to remand this case to the trial court for an award 
of prejudgment interest in an amount to be determined by the 
trial court.

Respectfully submitted,

Lisa S. Van Amburg 
Schuchat, Cook & Werner 
1221 Locust St., Suite 250 
St. Louis, Missouri 63103 
314/621-2626

Attorney for Petitioner

Dated: December 28, 1987