[00:00:01] Speaker 01: Case number 15-1338, United States Postal Service Petitioner versus Postal Regulatory Commission. [00:00:07] Speaker 01: Mr. Belt for the petitioner, Mr. Whitaker for the respondent. [00:00:53] Speaker 05: The Postal Service has filed four requests to transfer parcel delivery products from the market-dominant side to the competitive side under the applicable statute. [00:01:07] Speaker 05: We submitted the same type of evidence in all four cases. [00:01:10] Speaker 05: The commission approved the first three requests. [00:01:13] Speaker 04: Three out of four, that's pretty good. [00:01:15] Speaker 05: Not bad. [00:01:16] Speaker 04: Bear with me, there's more. [00:01:18] Speaker 05: By the third one, the commission included that the entire parcel delivery market was competitive. [00:01:24] Speaker 05: But it denied the fourth, and that's the one we're here for. [00:01:27] Speaker 05: It denied the fourth without even mentioning the first three, the first three decisions. [00:01:32] Speaker 05: And in denying that request under those circumstances, the commission, I think, violated two bedrock principles of administrative law. [00:01:39] Speaker 05: First, it departed from the evidentiary standard it had followed before and from the findings it made in the three previous cases without even mentioning them, let alone trying to distinguish them or explaining why it was departing from them. [00:01:51] Speaker 05: So that's one. [00:01:51] Speaker 05: And the second violation is that it failed to even acknowledge that there was a dissent, let alone engage in the arguments. [00:01:57] Speaker 02: Where does that become a Red Rock principle of administrative law? [00:02:01] Speaker 02: I never even heard of it. [00:02:02] Speaker 02: The dissent part? [00:02:03] Speaker 02: Yes, the argument that a majority and an agency must respond to the dissent. [00:02:10] Speaker 02: We have case after case after case, the majority must respond [00:02:18] Speaker 02: You have to, as I recall, you have to respond to a dissent. [00:02:21] Speaker 05: I think I have two cases to cite to you, Your Honor. [00:02:24] Speaker 02: Go ahead, which one? [00:02:25] Speaker 05: The first one is the American gas case, and that is 593 F-314. [00:02:29] Speaker 05: What did we, is that one of ours? [00:02:33] Speaker 02: That's one of yours, yeah. [00:02:34] Speaker 02: What did we say? [00:02:34] Speaker 05: And what you said was, and I'm just pulling the, I don't have the full case in front of me, but it said that the commission must, and this, I'm quoting this whole thing, must, at a minimum, acknowledge and consider [00:02:44] Speaker 05: And there's ellipses. [00:02:46] Speaker 05: Arguments raised by its dissenting commissioner. [00:02:50] Speaker 01: I think we've qualified that to say something like non-frivolous or, you know, non... Indeed, right. [00:02:59] Speaker 02: As long as I think there is... I don't understand that as a principle of administrative law. [00:03:03] Speaker 02: I must look back and look if we've said it, it's true. [00:03:06] Speaker 02: Because you do have to respond. [00:03:08] Speaker 02: Are you talking about an issue raised by the dissenting commission that was not raised by the petitioner? [00:03:17] Speaker 02: Well, I think yes. [00:03:19] Speaker 05: I think if the dissent makes an argument that calls... A new argument that is not raised by a petitioner. [00:03:25] Speaker 05: I think it does as a matter of reason decision-making, sure. [00:03:28] Speaker 05: That if it's charting a new course or interpreting a statute differently than it did before... Well, I don't understand that as a matter of administrative law. [00:03:40] Speaker 02: relied on some point that the petitioner raised. [00:03:45] Speaker 05: Well, in the main, I am saying that. [00:03:48] Speaker 05: The main argument I'm making is that they have three prior cases in which the dissent said, hey, these are factually indistinguishable. [00:03:57] Speaker 05: And the commission not only didn't address the dissent's argument, it didn't address the underlying cases themselves. [00:04:03] Speaker 05: So in many ways, these two principles walk together. [00:04:05] Speaker 02: You don't even have to reach the dissent point. [00:04:07] Speaker 05: Fair enough. [00:04:08] Speaker 05: Fair enough, Your Honor. [00:04:09] Speaker 05: And by the way, there is a second case with the same proposition, which is the Chamber of Commerce versus SEC, which is 412F3RD133. [00:04:17] Speaker 05: And again, it was a commission must address arguments presented by the dissent so long as they aren't out of bounds. [00:04:23] Speaker 05: And I think that goes, Judge Rogers, to your point. [00:04:25] Speaker 02: And were those arguments presented by the party or presented anew by the Senate? [00:04:32] Speaker 05: Frankly, I don't recall if this court in those cases made a distinction. [00:04:38] Speaker 05: I think those went largely to sort of policy considerations that the dissent, if they're charting a new interpretive course, which I think you could read what at least Mr. Whitaker's sort of contention of what the commission did is doing, that you have to at least address arguments why you shouldn't. [00:04:53] Speaker 05: I mean, one of the arguments that the dissent, I think, made, that we didn't make, for example, [00:04:59] Speaker 05: was that in light of the fact that there were already three separate cases culminating in a finding that the whole market is competitive. [00:05:07] Speaker 02: Oh, but you didn't raise it because you didn't have any idea that that was going to be the position. [00:05:12] Speaker 02: Yeah, I think that's right. [00:05:13] Speaker 02: I'm not talking about new evidence. [00:05:14] Speaker 02: I'm talking about a new angle on an argument. [00:05:16] Speaker 02: OK, that's a fair point. [00:05:18] Speaker 02: But really, that's your basic case, that the agency [00:05:25] Speaker 02: ignored the three prior cases when it decided. [00:05:27] Speaker 02: You don't need the dissent. [00:05:28] Speaker 05: No, that's true, Your Honor, but I think it's probably... The Senate's just making the same point. [00:05:32] Speaker 05: The Senate's making the same point. [00:05:34] Speaker 05: It's probably making it a little more sharply, and in some respects... Maybe it's making it better than you are. [00:05:38] Speaker 02: Is that your point? [00:05:38] Speaker 02: Well, it could be. [00:05:39] Speaker 05: It could have worded it a little better. [00:05:41] Speaker 05: It could have worded it a little better. [00:05:43] Speaker 05: But you're right, that our principal argument is you can't distinguish or depart from earlier cases without at least acknowledging that you're doing it and addressing them. [00:05:53] Speaker 04: Um, the especially when they're raised in the dissent, something like that. [00:05:59] Speaker 05: I think it's very fair that in a 3-2 decision where the dissent is saying, hey, we have these cases and these cases dictate this result that at the very least the majority should say [00:06:09] Speaker 05: No, they don't. [00:06:10] Speaker 05: I mean, I just think that it makes the violation even worse. [00:06:13] Speaker 02: If they had responded to the dissent, would the case be much better? [00:06:17] Speaker 02: Would you lose because they responded to the dissent? [00:06:19] Speaker 05: I don't think we would lose, but I would like to know the Commission's reasoning. [00:06:22] Speaker 05: And then we would be discussing whether that reasoning holds water. [00:06:25] Speaker 05: Here we have an absolute lack of reasoning, so it's a different kind of argument. [00:06:27] Speaker 05: This is a sort of basic failure of administration. [00:06:30] Speaker 05: That's what I said, I know. [00:06:31] Speaker 04: Just some women's worried about having to respond to dissents. [00:06:34] Speaker 02: That's exactly right. [00:06:42] Speaker 02: agencies often do not. [00:06:45] Speaker 01: Sometimes we do and sometimes we don't. [00:06:57] Speaker 00: Have I ever been? [00:06:59] Speaker 05: I would just like to, if I may, address one additional point, and that just goes to an argument that my colleague made that, as I understand their argument, that the commission didn't need to address these three prior parcel transfer cases because there was a recent case in the DVD roundtrip mailer case, which you're on. [00:07:16] Speaker 02: I was very impressed with their reason. [00:07:19] Speaker 05: I was interested in the reasoning, and I think the answer is that if... I mean, I thought the round-trip mailer opinion of this court was really wonderful. [00:07:30] Speaker 05: Well, I'm not going to stand here and disagree with you. [00:07:33] Speaker 05: Obviously, I can. [00:07:34] Speaker 02: Actually, our opinion had not come out by the time... [00:07:38] Speaker 02: what the agency was relying on, their round trip mailing decision. [00:07:43] Speaker 05: Right. [00:07:43] Speaker 05: And in fact, their round trip mailing decision didn't even come out until the comments were filed in the case. [00:07:47] Speaker 05: But I think the main point there is if that case were designed to chart a new course, they should have said so then, which they didn't. [00:07:55] Speaker 05: They could have said so in the order under review, which they didn't, or they could have said it in any order since, which they haven't. [00:07:59] Speaker 01: So your main point, as I understand it, is clear, that in the first three cases, [00:08:07] Speaker 01: market competition was defined or found. [00:08:11] Speaker 05: It was found. [00:08:12] Speaker 01: It was found that... And so, in the fourth case, it couldn't ignore that finding. [00:08:21] Speaker 05: That's correct. [00:08:22] Speaker 01: That it found... I mean, what we had was... Yeah, they're trying to distinguish between a situation... I'm thinking of cases that come to the court. [00:08:30] Speaker 01: Okay. [00:08:32] Speaker 01: You know, in this [00:08:34] Speaker 01: sense that the Postal Service asked for something with no opposition. [00:08:41] Speaker 01: You know, the Commission says fine. [00:08:43] Speaker 01: The next time it comes in, the public representative has a concern and the Commission says we will take care of that in the future. [00:08:51] Speaker 01: Third case, no opposition. [00:08:56] Speaker 01: Then we have this [00:08:59] Speaker 01: Number 2306, new market, lots of opposition, et cetera. [00:09:04] Speaker 01: We need a lot of analysis, et cetera. [00:09:09] Speaker 01: And the commission says, well, we've always followed the antitrust principles, justice department, et cetera. [00:09:16] Speaker 01: So now we come to your case, and the commission says, well, we've got some opposition here. [00:09:23] Speaker 01: It's just a different animal. [00:09:26] Speaker 01: And so I assumed, as maybe Judge Silverman's question suggested, that it's that finding about market competition that really is the problem here. [00:09:42] Speaker 05: I think for sure the finding that the entire parcel market is competitive is something that if the commission is going to now say it's not necessarily, it has to explain, it just has to explain the reason, the very least it has to do that. [00:09:55] Speaker 05: As to the no opposition part, I just want to push back on the facts. [00:09:58] Speaker 05: On the very first of the parcel transfer cases, there was a strong amount of opposition to that by an actual user of that product. [00:10:06] Speaker 01: In 689? [00:10:07] Speaker 01: 689, that's right. [00:10:08] Speaker 05: And in fact, the opposition in the case now on review was by – it was strong, no doubt, but it was by a company that in fact doesn't use the product. [00:10:18] Speaker 05: And they were mostly afraid that there was something that was going to be said that was going to be a problem for the ground trip mailer case. [00:10:24] Speaker 05: So the level of opposition – there was opposition in the first of the cases. [00:10:28] Speaker 05: But also, it goes to not just the finding, and I think that is critical. [00:10:34] Speaker 05: There's a finding that the entire parcel delivery market is competitive. [00:10:38] Speaker 05: If it suddenly isn't, they have to explain why. [00:10:42] Speaker 05: But I think it also goes to the evidentiary standard that the Commission imposed in prior cases. [00:10:47] Speaker 05: It doesn't mean it can't change its mind, but it does mean it has to explain why it's changed its mind. [00:10:52] Speaker 04: I thought that was the gravamen of your argument, is that there was a new evidentiary standard. [00:10:57] Speaker 05: I think it's both, Your Honor. [00:11:00] Speaker 05: I mean, I really do. [00:11:02] Speaker 05: In some ways, they sort of flow together. [00:11:04] Speaker 05: I mean, there's the, what type of evidence do you need? [00:11:07] Speaker 05: They definitely change that. [00:11:08] Speaker 05: There's what does that evidence need to show? [00:11:10] Speaker 05: And they change that too. [00:11:12] Speaker 05: Because I think rather than, I think the first three parcel transfer cases really stand for the proposition that whether there's one market or whether there are different components. [00:11:26] Speaker 02: common sense without very low evidentiary burden. [00:11:29] Speaker 05: I would say it didn't have as high an evidentiary burden as you might see in other cases. [00:11:34] Speaker 05: We don't know why they've changed their mind. [00:11:39] Speaker 05: There's no, for example, explanation that we now understand the market better or that we understood it worse. [00:11:45] Speaker 05: I think it did rely in part on common sense. [00:11:48] Speaker 05: If anything we do is a competitive product, it has to be putting things in boxes and shipping it because there is competition there. [00:11:56] Speaker 05: So I think it's both the evidentiary standard and the finding, the ultimate finding, that the parcel delivery market is competitive across the board. [00:12:05] Speaker 05: I have no further points to make. [00:12:07] Speaker 05: If the court doesn't have any further questions, I'll reserve some time for rebuttal. [00:12:10] Speaker 02: Council, I must say I think your position is very strong. [00:12:15] Speaker 02: Thank you. [00:12:18] Speaker 04: That's called framing the argument. [00:12:20] Speaker 03: You may not need to speak further. [00:12:26] Speaker 03: May it please the court, Henry Whitaker, for the commission. [00:12:30] Speaker 03: You're from the Civil Division? [00:12:32] Speaker 03: Yes, Your Honor, for the commission. [00:12:36] Speaker 03: The commission in this case was reasonable in concluding that the Postal Service had failed to present sufficient evidence. [00:12:54] Speaker 03: The first reason, I think, is because of the round-trip mailer. [00:12:59] Speaker 02: Oh, come on. [00:13:00] Speaker 02: God knows I know the round-trip mailer. [00:13:02] Speaker 02: And that is so much more difficult and an entirely different problem. [00:13:07] Speaker 02: Well, actually, I mean, the only way it's different, Your Honor, it's actually not really different. [00:13:12] Speaker 02: When you're talking about whether or not the real competition is caused by Netflix in the streaming level, it's got nothing to do with the direct [00:13:24] Speaker 03: Well, but if you'll recall in the round trip mailer order, Your Honor, another significant question in that case was the extent to which [00:13:35] Speaker 03: the entertainment content on physical DVDs was a reasonable substitute for streaming services and Redbox kiosks. [00:13:45] Speaker 03: So yes, there was the upstream downstream distinction that your honor's opinion, I thought, quite ably pointed out. [00:13:51] Speaker 03: But there was also the question of substitutability, which is I think central [00:13:59] Speaker 02: Yes, but that is an entirely different kind of case that is enormously subtle and difficult and these prior cases were not so subtle and different and they were very similar to the case you had before. [00:14:12] Speaker 03: Well, but I think as in the round trip mailer, [00:14:16] Speaker 03: proceeding, there were a number of significant red flags. [00:14:21] Speaker 03: Which were? [00:14:22] Speaker 03: Which were number one, the Postal Service in this case admitted that it was going to increase the price of this particular product and that that price increase would not result in a significant loss of business. [00:14:38] Speaker 03: That is pretty close to an outright admission that they have market power within the meeting of [00:14:45] Speaker 03: Is that what the agency relied on? [00:14:48] Speaker 03: The agency absolutely relied on that point in talking. [00:14:54] Speaker 02: And distinguished the prior three cases? [00:14:58] Speaker 03: Well, Your Honor, I have to concede that in the commission's analysis, it did not indeed mention the prior. [00:15:04] Speaker 02: Isn't black letter administrative law that agencies have to treat like cases the same [00:15:17] Speaker 03: The court has held that the agency can indeed discharge that responsibility without citing the particular cases. [00:15:25] Speaker 03: It's true. [00:15:26] Speaker 02: You have to have some discussion, though. [00:15:28] Speaker 02: If we've got this in the past, you don't have to cite the case, but we're going to change our view on this. [00:15:32] Speaker 03: Well, and I think that if you look at the considerations stressed by the commission's order, [00:15:41] Speaker 03: There are factors that distinguish this case from the prior cases. [00:15:44] Speaker 03: But Your Honor, I would point the court to two cases that I think are very helpful for us on that score. [00:15:51] Speaker 03: One is Gilbert versus NLRB. [00:15:54] Speaker 03: We cite these in our brief, I think, at page 46. [00:15:56] Speaker 03: And the other is a case called environmental action versus FERC, where the court said you can distinguish cases by emphasizing considerations that were not previously relied upon. [00:16:05] Speaker 03: And I've talked about the price increase. [00:16:08] Speaker 03: That's a significant one. [00:16:11] Speaker 02: Um, this is really the council. [00:16:13] Speaker 02: I have to tell you, I find the government's position so weak in this case. [00:16:18] Speaker 02: Well, I hope to convince you otherwise. [00:16:19] Speaker 02: Seriously, as a former deputy attorney general, I wonder why the Justice Department did not just go back to the commission and say, let's remain and take another shot. [00:16:32] Speaker 02: Well, because I think this is why the Justice Department gets [00:16:39] Speaker 03: This is not unreasonable decision making. [00:16:41] Speaker 03: The prior parcel transfer cases in no way reflect some all-encompassing determination of the entire parcel market is competitive and indeed the Postal Service's own submissions [00:17:03] Speaker 03: Well, I think, Your Honor, we certainly amplify on certain points that the Commission made, but I think you can discern, certainly, the path of the agency's reasoning. [00:17:11] Speaker 03: And I was mentioning the prior parcel transfer cases. [00:17:14] Speaker 03: One thing that the Postal Service has not tried to do in any of the prior cases is ask the Commission to lump together a retail product and a commercial product. [00:17:25] Speaker 03: And that is quite significant. [00:17:30] Speaker 03: In that order, contrary to Council's contention, the Commission did not find that the entire parcel market was competitive. [00:17:38] Speaker 03: Instead, it found that a segment of the retail ground market was the relevant market. [00:17:44] Speaker 03: Here, in contrast, [00:17:46] Speaker 03: The Postal Service's submission lumped in those two things together, and that is potentially significant. [00:17:53] Speaker 03: Indeed, the Postal Service itself admitted that single-piece mailers are in a different relevant market than bulk mailers. [00:18:00] Speaker 03: That's it, JA-49. [00:18:01] Speaker 03: In other words, [00:18:02] Speaker 03: that it is, like, not true that the entire parcel market is competitive. [00:18:06] Speaker 03: I mean, what the Postal Service seems to think is that, well, the entire parcel market is competitive, so we can segment the market wherever we want. [00:18:12] Speaker 03: No, I mean, that's not how market definition works. [00:18:16] Speaker 03: If the entire parcel market is competitive, then you should just, like, treat that as a relative market. [00:18:21] Speaker 03: And that is not what the Commission has done in any of those prior parcel transfer cases. [00:18:25] Speaker 03: The third significant factor that sets this case apart, which the Commission certainly relied on, is the vast below-cost price disparity between the product here and the allegedly reasonably equivalent substitutes. [00:18:39] Speaker 03: And they say they have [00:18:41] Speaker 03: at most 38.7% of the relevant market, and possibly as little as like 7%. [00:18:47] Speaker 03: And if that's really true, and they really are reasonably equivalent substitutes for FedEx and UPS, it's hard to see why the supposedly reasonable substitutes are double and triple the cost. [00:18:58] Speaker 03: And that is absolutely something the Commission relied on. [00:19:01] Speaker 03: And fourth, one reason why it's significant that this is the fourth parcel transfer case, as opposed to the first three, is now there are three other parcels [00:19:15] Speaker 03: Parcel Select, which the Postal Service told us, was 80% of the under one pound ground parcel market back in 2011. [00:19:24] Speaker 03: And yet, in their market definition figures, they did not even include that product in any relevant market. [00:19:30] Speaker 03: And the Commission clearly admonished the Postal Service at footnote 33 that it needed to include all of those parcel products in the relevant market. [00:19:39] Speaker 03: So I think that it was certainly reasonable for the Commission to apply the standard of the round trip mailer when there were significant red flags with the Postal Service's own submission. [00:19:50] Speaker 03: And those red flags are made particularly apparent [00:19:55] Speaker 03: by the Postal Service's own price elasticity thing, which admittedly came out after the commission's proceeding, which showed that the demand for this product, the first-class mail parcels product, is in fact inelastic, which is like the very definition of market power. [00:20:12] Speaker 03: And the other thing I would mention is we've also made a harmless error argument, Your Honor. [00:20:17] Speaker 03: And even if you think that what Your Honor referred to as the very sophisticated showing, even if [00:20:24] Speaker 03: If you thought it was error for the commission to fail to cite those prior transfer cases, I think that our substantial showing that they just simply cannot meet the statutory standard is certainly something the court can and should consider. [00:20:43] Speaker 03: We should consider your argument, even if it's not made by the... Absolutely, I think you can do that because I think that goes to... No, no, no, that's violation of channel. [00:20:51] Speaker 02: But if there were a violation of Chenery, and I don't think there is a violation of Chenery, as I've tried to discuss... There would be a violation of Chenery if we relied on your reasoning that wasn't in the Commission's decision. [00:21:05] Speaker 03: Well, no, I think that would go to whether there is an error. [00:21:07] Speaker 03: I don't think that would go to whether any error is harmless error, which instead, I think, goes to whether there is any reasonable prospect that any error, any failure of the... Where did you get this theory? [00:21:20] Speaker 03: Well, I get it from the Administrative Procedure Act, Your Honor, which puts the... I think that is just an assertion of administrative law that has never been recognized. [00:21:32] Speaker 02: Well, actually, it was recognized, Your Honor, by this Court's decision in Zivalos in 2015, in which... That if a counsel raises an argument, not raised by an agency, we can take into account the counsel's argument [00:21:50] Speaker 03: I certainly think you can, and what this court held in Zavallis, and certainly the court has applied half harmless error in a number of different administrative procedure cases, by the way. [00:22:00] Speaker 02: Yes, yes, yes, but not where you're going up with a reasoning for an opinion which is different from what you... I don't think it is different. [00:22:08] Speaker 03: I was just sort of making an even if argument. [00:22:10] Speaker 03: Let me just emphasize. [00:22:11] Speaker 03: I mean, one of the points the commission certainly made was that given the Postal Service's own assertion [00:22:18] Speaker 03: that it intended to jack up the price of this product, 22%, without, it didn't think it would lose a substantial amount of business, that's a J4849, but that, it made it incumbent on the Postal Service to provide an estimate of its demand, demand elasticity for this product. [00:22:35] Speaker 03: And that is also something that this court mentioned in the Roundtrip Mailer case as something that was potentially relevant. [00:22:42] Speaker 03: So that is absolutely something that the commission relied on. [00:22:52] Speaker 03: That's made even more pointed by the fact that we now have the elasticity figure and it shows that they may well have market power over this product. [00:23:01] Speaker 03: And, but what this court said in Zavales, and I think it's significant here, I mean, one way, remember, we denied this request without prejudice. [00:23:10] Speaker 03: I mean, the Postal Service could tomorrow turn around and ask the Commission to reconsider this decision. [00:23:15] Speaker 03: And that was a very similar situation to what you had in Zavales, where the court said that if you just have an APA procedural error, [00:23:23] Speaker 03: And the party asserting the error can just go back and ask for reconsideration before. [00:23:28] Speaker 03: What was the procedural error in that case? [00:23:31] Speaker 03: Well, it was a listing decision about whether somebody was a foreign narcotics drug trafficker. [00:23:36] Speaker 02: It wasn't with respect to the reasoning of the case. [00:23:40] Speaker 02: It wasn't a general type case. [00:23:42] Speaker 03: Well, I don't think that was necessarily the procedural error that was at issue, Your Honor. [00:23:46] Speaker 03: Fair enough. [00:23:47] Speaker 03: That's not a procedural error. [00:23:49] Speaker 04: What's the procedural error here? [00:23:51] Speaker 03: Well, I think if there is a procedural error, and we don't think there is, it is at most a failure to cite and discuss the prior parcel transfer cases, which I think the decision, the substance of the commission. [00:24:04] Speaker 04: It seems to me, Council, the problem with your argument on this, Zavalo, and correct me, I'm sure you'll correct me if you think I'm wrong, is that if you're allowed to go back and file again, you're saying file again. [00:24:17] Speaker 04: If they're using the incorrect legal standard for how to determine whether the evidence is substantial or not, they're going to run into the same error again. [00:24:27] Speaker 03: Well, I don't understand the Postal Service to be contending we apply the incorrect legal standard. [00:24:31] Speaker 03: I mean, the Postal Service in the Roundtrip Mailer case agreed with it. [00:24:33] Speaker 04: Well, maybe I didn't phrase it. [00:24:34] Speaker 04: I mean, it's the issue of what evidence is required, the legal question, what sort of evidence is required. [00:24:41] Speaker 04: And you're going to run into that again. [00:24:43] Speaker 04: They're going to run into that again if they file again. [00:24:46] Speaker 04: Well, I guess, I mean... Their point is that the Commission is using the wrong legal judgment about what type of evidence is substantial. [00:24:54] Speaker 03: They're dead wrong about that, but, I mean, as I understand their argument, their argument is that it turns on a failure to cite and discuss the prior parcel transfer cases. [00:25:04] Speaker 03: But let me just talk about the legal standard here for a second, Your Honor, because I really think the legal standard the Commission should apply [00:25:11] Speaker 03: was articulated in the Roundtrip Mailer case, which was supported by the Postal Service. [00:25:14] Speaker 03: They didn't contend in the Roundtrip Mailer case that that was a departure in any way from the Commission's prior precedents. [00:25:22] Speaker 02: They could have done that on judicial review, Your Honor, and they... Well, that was absolutely a unique situation which the Postal Rate Commission had never [00:25:32] Speaker 02: It's actually not unique, Your Honor. [00:25:36] Speaker 03: The question is how to define the relevant market. [00:25:40] Speaker 02: This was an extraordinarily interesting question, whether or not the market could include the content for supply downstream. [00:25:52] Speaker 03: Actually, Your Honor, no, I don't think it was a unique question. [00:25:55] Speaker 02: I thought it was pretty sophisticated. [00:25:57] Speaker 02: Well, I think the question was what the relevant market was. [00:26:05] Speaker 03: Well, that's always true. [00:26:06] Speaker 03: Well, I know. [00:26:07] Speaker 03: And that's my point, I guess. [00:26:08] Speaker 02: Well, they looked in your prior cases on this. [00:26:11] Speaker 02: You thought the relevant market was obvious. [00:26:14] Speaker 02: Well, I don't think that that's why it looked like it was just common sense. [00:26:18] Speaker 02: UPS and what's the other one? [00:26:21] Speaker 02: UPS and FedEx. [00:26:28] Speaker 02: Of course, the problem with the round trip mailer, there was nobody in that market. [00:26:33] Speaker 03: Several points, Your Honor. [00:26:34] Speaker 03: That's not what the prior parcel cases say. [00:26:36] Speaker 03: Market definition is highly fact specific. [00:26:39] Speaker 03: It depends on the arguments and evidence presented in each of the specific cases. [00:26:43] Speaker 03: The only difference between the round trip mailer case and this case is that there may well be some direct competitors for this. [00:26:49] Speaker 03: That is not dispositive in any way of the market power question. [00:26:53] Speaker 03: It is often the case in antitrust cases that a firm has market power even when it has some competitors. [00:26:59] Speaker 03: That doesn't mean you can just define the relevant market to be whatever products without a rigorous examination of what products actually are reasonably global substitutes. [00:27:17] Speaker 02: kind of sophisticated analysis they should have. [00:27:20] Speaker 03: Well, except we've already done that, Your Honor, in order under review. [00:27:23] Speaker 03: We outlined in some detail the kinds of... Your brief is very impressive. [00:27:29] Speaker 03: Well, I think it's not just our brief, Your Honor. [00:27:32] Speaker 03: I mean, in the commission's order itself, we can discuss a variety of different considerations and ways the Postal Service could divide up the market, could support that with evidence, the kinds of things it should be thinking about. [00:27:46] Speaker 03: And so I think that absolutely is in the order. [00:27:49] Speaker 03: And the court can absolutely and should affirm the order on that basis. [00:27:54] Speaker 03: There are no further questions. [00:27:56] Speaker 01: Thank you. [00:28:02] Speaker 05: I hesitate to engage in a debate with Mr. Whitaker over the standard, because I think this debate has to happen before the commission. [00:28:10] Speaker 00: Someone says, well, the commission's already told you. [00:28:12] Speaker 05: Pardon? [00:28:13] Speaker 00: Says the commission's already told you what you have to do. [00:28:17] Speaker 05: You mean the Commission through Mr. Whitaker? [00:28:18] Speaker 00: No, the Commission in its order. [00:28:20] Speaker 05: Oh, the Commission in its order told us... I'm sorry? [00:28:23] Speaker 00: There are various ways to divide up the market. [00:28:25] Speaker 05: You can do it one way or the other, but you've got to... Well, you know, that's the problem. [00:28:28] Speaker 05: There really is a tension between... I mean, there's obviously tension between the three prior orders, the three prior transfer... [00:28:34] Speaker 05: It wasn't like the commission decided on day one that, well, the entire parcel market. [00:28:39] Speaker 05: I mean, these were all products that dealt with different sort of components of the market. [00:28:43] Speaker 05: The first one was a lightweight commercial ground shipping product. [00:28:48] Speaker 05: The second was a single piece commercial, one to three day product. [00:28:54] Speaker 05: The third was a retail single piece, lightweight ground product. [00:28:57] Speaker 05: And then this one is a retail single piece, lightweight one to three day product. [00:29:01] Speaker 05: The point I'm making, and sorry for just running through that, was that the commission decided that whether it's one market or whether, regardless of how you segment the market, there is a cross the board competition. [00:29:13] Speaker 05: is that is the finding of the commission through these three cases. [00:29:16] Speaker 05: And I think I heard Mr. Whitaker say that the commission never found that the entire parcel market is competitive. [00:29:23] Speaker 05: It absolutely found that. [00:29:25] Speaker 05: And that was the parcel post case, the third of those cases. [00:29:28] Speaker 05: That is a finding. [00:29:30] Speaker 05: And so I'm not sure. [00:29:31] Speaker 01: Oh, I think he was talking about ground transportation. [00:29:35] Speaker 05: Well, they know it wasn't ground, though. [00:29:36] Speaker 05: They said the entire parcel market is competitive. [00:29:38] Speaker 05: That was the finding. [00:29:39] Speaker 05: But in the time set. [00:29:40] Speaker 05: They didn't say, well, only [00:29:42] Speaker 05: bulk or anything. [00:29:43] Speaker 05: They said the entire market is competitive. [00:29:46] Speaker 05: As for the allegation that this case is unique, [00:29:50] Speaker 05: Again, the commission's order didn't address any factual distinctions. [00:29:55] Speaker 05: But we were going to raise prices. [00:29:57] Speaker 05: I think we announced we were going to raise prices in two of the three prior cases. [00:30:00] Speaker 05: So the idea that this case was distinguished on that ground is false. [00:30:04] Speaker 05: As for the price elasticity, something, again, the commission has never relied on, never suggested it needed. [00:30:10] Speaker 05: And also, really, price elasticity is of limited value when the entire premise of us wanting to transfer the product is that it's been artificially held down because of regulation. [00:30:18] Speaker 05: Like of course, we think we can raise prices, our existing prices, preferably because we think they are artificially underpriced. [00:30:25] Speaker 05: So, but these are all the discussions we can have with the Commission. [00:30:27] Speaker 02: I think it is clear to me that one thing the Commission can't do is... Neither UPS or the other competitor intervened in this case. [00:30:37] Speaker 05: That is correct, that is correct. [00:30:38] Speaker 02: So they weren't objecting to what you were doing. [00:30:41] Speaker 05: I think it is fair to say that UPS FedEx does not object to us raising our prices. [00:30:45] Speaker 02: Because that actually helps their competitive position. [00:30:49] Speaker 05: I think that's fair to assume, but yeah, they didn't intervene here. [00:30:51] Speaker 05: If the court doesn't have any further questions, we ask that the case be remanded. [00:30:55] Speaker 00: Thank you. [00:30:55] Speaker 00: We'll take the case under advisement.