Court Approves Postal Commission Remedy in GameFly Case

The D.C. Circuit Court of Appeals has approved the Postal Commission's plan to end DVD-mailer discrimination and Netflix's favored status at the U.S. Postal Service. The decision was the result of a complaint by GameFly. The U.S. Postal Service will now equalize the postage for DVD flats and letters.

Last year, the D.C. Circuit ended the U.S. Postal Service's favoritism toward Netflix mail, which sorted Netflix DVD-mailers by hand for free, while sending other companies' DVD-mailers through automated processing machines. GameFly challenged the Post Office's bias in court, arguing that automatic processing often damages DVDs, requiring GameFly to package their discs in heavier and more expensive cardboard packaging.

GameFly claimed that it paid 88 cents per rental to send DVDs as 1-ounce first-class flats, which costs twice as much as it costs Netflix to mail a 1-ounce, first-class letter. The court sided with GameFly and ordered the Postal Regulatory Commission to justify the discrimination or eliminate it. The Commission ultimately adopted a solution which equalized the cost of first class letter and flat DVD rates, so any DVD mailer can use either first-class letter or flat. The D.C. Circuit affirmed the remedy, denying the Postal Service's petition for review.

"The remedy the Commission selected was unequivocally effective in equalizing the playing field, thereby eliminating the discrimination – or at least its injurious effects," Judge Karen Henderson wrote for the three-judge panel.

"Given the Commission's thorough and sound explanation for preferring the rate-based remedy it chose over the proposed operational remedies, we defer to its technical remedial choice," Henderson wrote.

You can read the ruling here (PDF).

Source: Courthouse News

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