April 6, 2017

ESTHER WURZBERGER v. UNITED STATES POSTAL SERVICE

PSBCA Nos. 6471, 6483

APPEARANCE FOR APPELLANT
Esther Wurzberger

APPEARANCE FOR RESPONDENT
Jessica J. Stringer, Esq.
United States Postal Service Law Department

OPINION OF THE BOARD

Appellant, Esther Wurzberger, seeks $2,000,000 from Respondent, United States Postal Service, related to the Postal Service’s termination on notice of a contract postal unit in Brooklyn, New York.  We deny the appeals, ruling in favor of the Postal Service.

FINDINGS OF FACT

1. In 2006, Ms. Wurzberger, owner of the Better Letter Contract Postal Unit (CPU), and the Postal Service entered into Contract No. 2BCPAC-07-B-0077 for the operation of a contract postal unit in the Williamsburg neighborhood of Brooklyn, New York.  The contract was for “an indefinite term, subject to the rights of termination specified” in the contract.  (Stip. 12; AF 1 at 14).
2. The contract’s Termination on Notice clause provided:
   This contract may be terminated by either party upon 120 days’ written notice. In the event of such termination, neither party will be liable for any costs, except for payment in accordance with the payment provisions of the contract for actual services rendered prior to the effective date of the termination. When required to protect the Postal Service’s interests, the contracting officer may terminate the contract upon one day’s written notice.
   (AF 1 at 11).
3. The Better Letter CPU was located less than one-half mile from the Williamsburg Post Office.  Many of its customers spoke Yiddish, as did the Better Letter CPU’s staff.  (Stip. 5; AF 6 at 81).  While the Better Letter CPU provided many postal retail services, it did not provide post office box service or sell money orders (Stip. 9).  Postal officials favorably viewed Better Letter CPU’s operations (Stip. 19; AF 4 at 1).
4.  On May 13, 2011, the Postal Service and the American Postal Workers Union (APWU) executed a collective bargaining agreement (CBA) which included a Memorandum of Understanding that stated in part:
   The Postal Service will close or convert to in-house operations as soon as practicable the following full-service Contract Postal Units (CPUs) that solely provide postal services with box sections.  The parties will meet to discuss the precise dates on which these CPUs will be closed or converted.
   The Better Letter CPU was among twenty CPUs specifically listed in the CBA for closure or conversion to in-house operations (the closure list).  (Stips. 13-15; AF 7 at 93).
5. The APWU, not the Postal Service, identified the Better Letter CPU for inclusion on the closure list.  After ratification of the CBA, the Postal Service negotiated with the APWU in an effort to substitute another CPU in place of the Better Letter CPU for inclusion on the closure list.  Ultimately, however, the Postal Service agreed to close the Better Letter CPU as provided in the CBA.  (Stips. 16-17; AF 10, 19-22).
6. On January 23, 2012, as directed by the contracting officer, a Postal Service purchasing specialist sent a letter to Ms. Wurzberger, stating:
   As a result of an agreement with the American Postal Workers Union, this letter is to notify you that the Better Letter CPU, Contract Number 2BCPAC-07-B-0077, is being terminated effective close of business on May 31, 2012. The Postal Service hereby exercises its legal right to terminate with 120 days written notice pursuant to Part 3-Contract Clauses, Item 3.6 of your contract.
   (AF 3 at 63; Stip. 20).  On April 11, 2012, the Postal Service’s contracting officer signed a contract modification terminating the Better Letter CPU, effective May 31, 2012 (Stip. 21; AF 2 at 52).
7. On July 20, 2012, Ms. Wurzberger filed a notice of appeal with the Board challenging the termination, which the Board docketed as PSBCA No. 6471.  On November 1, 2012, Ms. Wurzberger submitted a $2,000,000 certified claim for thirty years’ lost profits which the contracting officer denied on November 28, 2012 (Case File).  The Board docketed the resulting notice of appeal as PSBCA No. 6483, and consolidated the cases (January 10, 2013 Order).
8. On August 22, 2012, the Postal Service awarded another CPU contract to Ms. Wurzberger to operate the Better Letter CPU again.  That contract provided for the Better Letter CPU to open at a location 1.1 miles from its former location (Respondent’s Second Rebuttal Evidence, authorized by November 10, 2016 Order).¹
9. At the parties’ request, the Board suspended this case while Temple Contract Station, LC, PSBCA Nos. 6430, 6488, 14 BCA ¶ 35,669, was being decided by the Board, and then considered on appeal by the Federal Circuit (September 6, 2013 Order; August 14, 2014 Order).  After the Federal Circuit dismissed the appeal of Temple Contract Station, LC (No. 14-1662) on April 2, 2015, the Board lifted the suspension of this case (May 5, 2015 Order).  The Board later granted the parties’ joint request to decide the appeals based on written submissions in lieu of an oral hearing (October 15, 2015 Order and Memorandum of Telephone Conference).  The record closed November 22, 2016 (November 22, 2016 Order).

DECISION

This case is substantially similar to the situation before the Board in Temple Contract Station, where we addressed a variety of theories challenging the Postal Service’s termination of a CPU contract based on inclusion of that CPU in the APWU collective bargaining agreement’s closure list.  The Board in Temple Contract Station concluded that the Postal Service did not breach that contract by exercising a termination on notice clause.  Temple Contract Station, 14 BCA ¶ 35,669 at 174,602.  The Board specifically asked Ms. Wurzberger to explain why this case is distinguishable from that precedent.  See October 13, 2016 Order.  We discern four arguments by Ms. Wurzberger in an effort to do so.
First, Ms. Wurzberger argues that the Postal Service’s termination decision was made in bad faith because it discriminated against the CPU’s Yiddish-speaking staff and customers, and was insensitive to the Jewish culture of the Williamsburg neighborhood.  Ms. Wurzberger further contends that the CPU contract was terminated in favor of a (presumably) non-Yiddish-speaking and non-sectarian post office resulting in a disservice to Yiddish-speaking customers.  She similarly argues that the Postal Service’s exercise of the termination on notice clause breached the implied duty of good faith and fair dealing. 
A bad faith determination would require clear and convincing proof that the Postal Service acted with a specific intent to injure Ms. Wurzberger.  See Am-Pro Protective Agency, Inc. v. United States, 281 F.3d 1234, 1239-40 (Fed. Cir. 2002); Kalvar Corp., Inc. v. United States, 543 F.2d 1298, 1301-02 (Ct. Cl. 1976).  The implied covenant of good faith and fair dealing prohibits the parties from interfering with each other’s contract performance so as to destroy the reasonable expectations of the other party regarding the fruits of the contract.  See Metcalfe Constr. Co. v. United States, 742 F.3d 984, 991 (Fed. Cir. 2014).  The covenant does not expand a party’s contractual duties beyond those expressed in the contract and does not create duties inconsistent with express contract terms.  See id.
The Postal Service terminated the Better Letter CPU contract because the CBA required its closure; no evidence shows an intent to injure Ms. Wurzberger.  The record does not include any evidence that the language spoken by Better Letter CPU’s staff (or their religion, or religious sensitivities) was factored into the termination decision or considered in any way by postal officials.  Further, this bad faith assertion is belied by the Postal Service’s attempts to substitute another CPU for closure in place of the Better Letter CPU (Finding 5).²  Regarding Ms. Wurzberger’s breach of the duty of good faith and fair dealing argument, as the Board explained in Temple Contract Station, the legitimate exercise of an express contract right cannot breach the implied duty of good faith and fair dealing.  Temple Contract Station, 14 BCA ¶ 35,669 at 174,601.
Ms. Wurzberger’s second argument emphasizes that the CBA required closure of full-service CPUs with post office box service.  She therefore asserts that the Better Letter CPU, which did not provide post office box service nor sell money orders (Finding 3), was not a full-service CPU and should not have been included on the closure list.  Although the CBA’s language required closure of “full-service” CPUs “with box sections” (Finding 4), Better Letter was included specifically in the list of twenty CPUs required to be closed (or converted to in-house operations).  As discussed above, the record does not show that the Better Letter CPU was included on the closure list because of bad faith.  Thus, regardless of whether the CPU offered post office box services, the Postal Service had the right to exercise the termination on notice clause, and acted reasonably when it did so, especially considering that the clause did not include express limitations on its use.  In Temple Contract Station, we addressed a similar argument.  There, the appellant argued that the CBA had identified the CPU at issue using an incorrect address, and therefore the Postal Service could have declined to close it.  We held that since both the Postal Service and the APWU understood the CBA as requiring closure of the CPU at issue, the Postal Service acted reasonably by closing it.  Temple Contract Station, 14 BCA ¶ 35,669 at 174,600.  Similarly, here, it does not matter to our analysis whether the Better Letter CPU provided post office box service, as it specifically was included on the closure list.
Third, Ms. Wurzberger argues that the termination violated the Postal Service’s Supplying Principles and Practices (§ 5-13), which require the Postal Service’s Vice President of Supply Management to approve any “highly visible” contract termination.   Even were we to agree that termination of Better Letter CPU’s contract required vice presidential approval, violation of that provision is not actionable by an affected contractor.  Temple Contract Station, 14 BCA ¶ 35,669 at 174,599-600.
Fourth, Ms. Wurzberger argues that the decision to terminate her CPU represented poor public policy, and that termination was not in the Postal Service’s best interests.  She argues that the CPU’s location and the language skills and religious sensitivity of her staff benefitted the community, that the community objected to the closure, and that the CPU closing resulted in overcrowding at the Williamsburg Post Office.  Ms. Wurzberger also argues that closing any CPU was a bad idea, that some members of Congress disapproved of CPU closures, and that the APWU should not have been permitted to influence the Postal Service’s business decisions.
We need not explore the accuracy of these assertions because, as the Board explained in Temple Contract Station in rejecting such an argument, “[i]t is not our prerogative to substitute our judgement for the contracting officer’s as long as Respondent did not breach the contract.”  Temple Contract Station, 14 BCA ¶ 35,669 at 174,602.  Similarly, we need not consider whether closing the Better Letter CPU was in the Postal Service’s best interests.  Because “the termination on notice clause did not require the contracting officer to decide that termination was in the Postal Service’s best interests,” this argument cannot provide a basis for relief.  Temple Contract Station, 14 BCA ¶ 35,669 at 174,598.  The Board has no role in deciding whether termination was the best course for the Postal Service or represented good public policy.  Rather, our role is limited to deciding whether termination breached the contract.  Id.  It did not. 

CONCLUSION

The Postal Service’s exercise of the termination on notice clause of the Better Letter CPU contract did not breach that contract.  The appeals are denied.

Gary E. Shapiro
Administrative Judge
Chairman

I concur:
Alan R. Caramella
Administrative Judge
Vice Chairman

I concur:
Diane M. Mego
Administrative Judge
Board Member