                                                                                June 15, 1979


79-43       MEMORANDUM OPINION FOR THE
            ASSISTANT ATTORNEY GENERAL, CIVIL
            DIVISION

            Settlement of Litigation—Authority of the Postal
            Service (39 U.S.C. §§ 409, 2008)—Authority of the
            Attorney General (28 U.S.C. §§ 516, 519)


   This responds to your memorandum of March 14, 1979, requesting
our opinion concerning the settlement of litigation in which the U.S.
Postal Service (Postal Service) is represented by the Department of Justice
pursuant to 39 U.S.C. § 409(d).1 You ask in particular whether this Office
still adheres to the position taken in its memorandum of February 13,
1973. That memorandum concluded that although the matter was not free
from doubt the better interpretation of the pertinent legislation is that the
authority to settle is implicit in the power of the Attorney General to
conduct litigation affecting the Postal Service; hence, that such litigation
cannot be settled without the concurrence of the Attorney General.
   For the reasons set forth below in detail, we are modifying the posi­
tion taken in our earlier memorandum to the extent that where litigation
involves a matter within the sole prerogative of the Postal Service, the At­
torney General cannot settle the litigation over the objection of the Postal
Service, nor can he block a settlement advocated by the Postal Service.
Otherwise we adhere to our memorandum of February 13, 1973.
   The issues underlying your inquiry and our 1973 memorandum are,
first, whether 39 U.S.C. § 2008(c) gives the Postal Service final settlement



  1 39 U.S.C. § 409(d) provides:
       (d) The Departm ent o f Justice shall furnish, under section 411 o f this title, the Postal
       Service such legal representation as it may require, but with the prior consent o f the
       A ttorney General the Postal Service may employ attorneys by contract or otherwise to
       conduct litigation brought by or against the Postal Service or its officers or employees
       in matters affecting the Postal Service.

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 authority over its litigation,2 and, second, whether the independent status
of the Postal Service under the Postal Reorganization Act limits the con­
trols normally exercised by the Attorney General over agency litigation
 pursuant to 28 U.S.C. §§ 516, 519.3
   Our subsequent memorandum to the Special Assistant to the Solicitor
General, dated September 28, 1973, took a more cautious position than
the earlier memorandum and concluded that “ given the language of 39
 U.S.C. § 2008(c), it is far from clear that this Department could success­
 fully maintain that in no instance may the Postal Service settle a case
without the concurrence of this Department.” The memorandum sug­
gested that this problem might better be resolved on the basis of an agree­
ment between the Department of Justice and the Postal Service.
   Since then the Court of Appeals for the First Circuit handed down its
decision in Leonard v. United States Postal Service, 489 F. (2d) 814 (1st
Cir., 1974), holding that in the specific litigation before it the Postal Serv­
ice had the authority to settle a law suit over the objection of the Depart­
ment of Justice. The court stated that “ the legislative history [of 39
U.S.C. § 2008(c)] pointed out to us does not indicate that the section was
meant to have a reading not in accord with its literal language.” At 817.
The court, however, did not deem it necessary to provide a definitive
delineation of the respective litigating powers of the Postal Service and the
Department of Justice. It felt it sufficient to rule that in the case at bar the
Department of Justice could not block a settlement concluded by the
Postal Service affecting matters which, under the Postal Reorganization
Act, were committed to the control of the Postal Service. The opinion also
suggested that while the authority of the Department of Justice over litiga­
tion might empower it to refuse to entertain and possibly to settle litigation
even over the objection of the Postal Service, the Department lacked the
authority to block a settlement to which it agreed. Fn. 7, p. 817.
   Although we do not agree with all the reasoning of the Court of Ap­
peals, it may have reached the correct result in the case before it, assuming
that the subject matter of the litigation truly was peculiarly within the


 1 39 U .S.C . § 2008(c) provides:
      (c) Subject only to the provisions o f this chapter, the Postal Service is authorized to
      m ake such expenditures and to enter into such contracts, agreements, and ar­
      rangem ents, upon such terms and conditions and in such m anner as it deems
      necessary, including the final settlement o f all claims and litigation by or against the
      Postal Service. [Emphasis added.]
 1 28 U .S.C . §§ 516 and 519 provide:
      Section 516. Conduct o f litigation reserved to Department o f Justice. Except as other­
      wise authorized by law, the conduct o f litigation in which the United States, an agency,
      o r officer thereof is a party, or is interested, and securing evidence therefor, is reserved
      to officers o f the Departm ent o f Justice, under the direction o f the A ttorney General.
      Section 519. Supervision o f litigation. Except as otherwise authorized by law, the A t­
      torney General shall supervise all litigation to which the United States, an agency, or
      officer thereof is a party, and shall direct all United States attorneys, assistant United
      States attorneys, and special attorneys appointed under section 543 o f this title in the
      discharge o f their respective duties.

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autonomous sphere o f the Postal Service.4 In connection with its inter­
pretation of 39 U.S.C. § 2008(c), we believe that it would have been possi­
ble for the Department to make a stronger case based on the legislative
history of the subsection by showing that it was intended to cover only the
relationship between the Postal Service and the Comptroller General.5
Nevertheless, we would recommend relitigation of. that issue if at all, only
in an exceptionally strong case, for example, where the Postal Service
position is clearly erroneous.
   The second branch of the Court of Appeals opinion deals with the
extent to which the control of the Attorney General over Government
litigation conducted by the Department of Justice is modified by the
“ somewhat uneasy and unresolved tension between the dependent and
independent aspects of the new [Postal] Service.” 6 Leonard, at p. 815.
While 39 U.S.C. § 201 establishes the Postal Service as an independent
establishment in the “ executive branch,” § 202(a) provides for a bipar­
tisan Board of Governors with fixed terms who can be removed by the
President only for cause. In addition, the Postmaster General and the
Deputy Postmaster General are appointed and removable not by the Presi­
dent but by the Board of Governors. § 202(c), (d).
   An agency headed by a Board of Governors and by executive officers
who are not freely removable by the President is not substantively within
the executive branch of the Government as that term is commonly under­
stood. Purely executive officers must be freely removable by the Presi­
dent, Myers v. United States, 272 U.S. 52 (1926), and their discretionary
acts are subject to Presidential control. Marbury v. Madison, 5 U.S. (1
Cranch) 137, 166 (1803); Congress Construction Co. v. United States, 161


   4 See fn. 11, infra.
    ’ Section 2008(c) is located in a chapter entitled “ Finance.” Section 2008 itself is entitled
“ Audit and expenditures” and deals exclusively with the relationship between the C om p­
troller General and the Postal Service. The pertinent Com mittee report explains § 2008(c) as
follows:
       Subsection (c);—Authorizes the Postal Service to m ake all expenditures and enter into
      all contracts and agreements it deems necessary, including final settlement o f all claims
      against the Postal Service, expenditures cannot be disallowed by the Comptroller
       General. [(Emphasis added.) H. Rept. 1104, 91st C ong., 2d sess. 40 (1970).]
Moreover, § 2008(c) is virtually identical with § 9(c) o f the Tennessee Valley A uthority A ct,
16 U .S.C . § 831h (b). H .R . 4, 91st C ong., 1st sess., a predecessor to the bill that ultimately
became the Postal Reorganization Act, used the TVA as a model for the Postal Service. H.
Rept. 988, 91st Cong., 2d sess. 19 (1970). The legislative history o f a 1941 am endm ent to the
TVA legislation from which the pertinent parts here o f 16 U .S.C . § 83lh(b) are derived shows
that they were inserted in the legislation in response to complaints by the TVA that in­
terference by the Com ptroller General had prevented the TVA from entering into com ­
promises that could have avoided litigation and from settling law suits on favorable terms.
See, Amending the Tennessee Valley Authority Act, Hearing before the Com m ittee on
Military Affairs, House o f Representatives, 77th C ong., 1st sess., on H.R. 4961, pp. 52-64,
115-116, 121-122, 132, and 87 C o n g r e s s i o n a l R e c o r d 6199 (1941) (Representative May).
   ‘ This uneasy and unresolved tension is illustrated by the difference o f approach taken by
Leonard and Butz Engineering Corp. v. United States, 204 Ct. C l. 561 (1974). The form er
case stressed the independence o f the Postal Service, while the latter emphasized its
dependence.

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Ct. C l. 50, 55-56 (1963), cert, denied, 375 U.S. 817 (1963); 7 Op. A tt’y.
Gen. 453, 469-470 (1855). Congress clearly did not intend Postal Service
officials to have that status. The pertinent committee report (H. Rept.
91-1104) states that the Postal Service was taken completely out of the
President’s Cabinet and out of politics (at pp. 6, 12-13) and that the Board
was to constitute a buffer between the management of the Postal Service
and the possible influence of partisan politics. Ibid. In sum, the legislation
was designed to remove “ the day-to-day management of the Postal Serv­
ice from both Presidential and Congressional areas of concern while still
leaving the Postal Service subject to [their] broad policy guidance.” At
p. 13. Another important legislative consideration was the desire that the
Postal Service function in a business-like manner, rather than as a govern­
ment organization not subject in all respects to that standard. At
pp. 11-12.
    Section 410(a) of title 39 accordingly exempts the Postal Service from
many of the laws dealing with Federal contracts, property, works, of­
ficers, employees, budgets, or funds, leaving, however, many important
laws in those fields applicable to the Postal Service. 39 U.S.C. § 410(b).7
   The peculiar status of the Postal Service exempting it to a large extent
from Presidential control and from a substantial range of laws normally
applicable to executive establishments necessarily has an impact on the
control exercised by the Attorney General over postal litigation conducted
by the Department of Justice. The Attorney General’s power to control
litigation under 28 U.S.C. §§ 516, 519 flows from several sources. Some
result from his status as an officer of the court. Hence, it is his respon­
sibility not to litigate cases that would unnecessarily burden the Federal
courts," and that responsibility applies to litigation by the Department
conducted on behalf of independent regulatory agencies. See, Federal
Trade Commission v. Claire Furnace Co., 274 U.S. 160, 174 (1927);
Federal Trade Commission v. Guignon, 390 F. (2d) 323, 330 (8th Cir.
1968).9 It is also within his power to refuse to institute litigation and to ter­
minate law suits, once he determines that to bring or to continue them
would constitute unjust harassment against private parties. 2 Op. Atty.
Gen. 482, 486 (1831). Finally, the Attorney General must be able to pre­
vent action by an executive agency that would be illegal, such as a settle­
ment prohibited by law. 22 Op. A tt’y. Gen. 491 (1899).
   Another source of the Attorney General’s authority and responsibility
to control litigation is a derivative of the President’s power to control the
discretion of the agencies referred to above. That power is vested in the
Attorney General as the President’s alter ego, so that uniform policies


  ’ For the laws o f a governmental nature applicable to the Postal Service, see, Butz
Engineering Corp. v. United States, 204 Ct. C l. 561, 573-574, supra.
  ' See, Leonard, fn. 7, p. 817.
  ’ In this context see, however, the am endm ent to § 16 o f the Federal Trade Commission
A ct, 15 U .S.C . § 56, by § 204(a) o f the Act o f January 4, 1975, 88 Stat. 2199.

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in the execution of the laws and the conduct of litigation will prevail. This
source of the Attorney General’s power is necessarily weakened with
respect to an entity, such as the Postal Service.
   In our view, the answer to the questions posed depends on the basis on
which the Attorney General seeks to settle a case, and on the subject mat­
ter of the litigation. If the Attorney General acts in his capacity as an of­
ficer of the court, or for Government-wide policy reasons based on laws
and regulations that cover the Postal Service, we do not believe that con­
sent of the Postal Service is required. Moreover, since the power to dismiss
includes the power to prescribe the terms on which the suit is to be dis­
missed, settlement negotiations are within his jurisdiction, 39 U.S.C.
§ 2008(c) notwithstanding. See, Castell v. United States, 98 F. (2d) 88, 91
(2d Cir., 1938), cert, denied, 305 U.S. 652 (1938); Leonard, supra, fn. 7, at
817-818; 22 Op. A tt’y. Gen. 491, 494 (1899).'°
   On the other hand, where the subject matter of the litigation is of
“ parochial” interest to the Postal Service and involves its day-to-day
management (H. Rept. 91-1004, p. 13, supra) without any impact on the
general Federal law, or “ policy decisions within the sole prerogative of the
Postal Service” (.Leonard, at 817), the spirit and purpose of the Postal
Reorganization Act of 1970 indicate that a decision to settle and the con­
duct of settlement negotiations are both within the jurisdiction of the
Postal Service.
   Conversely, we do not believe that Leonard stands for the proposition
that the Attorney General can never block a settlement the Postal Service
seeks to conclude. As indicated, above, if the settlement is illegal or if it
would create a precedent adversely affecting the Federal establishment as a
whole, the Attorney General must be able to prevent it. Leonard does not
hold to the contrary. That case was based rightly or wrongly" on the
premise that the litigation involved only matters that were of concern to
the Postal Service, and the court deliberately refrained from passing on
problems relating to settlements not within those narrow confines.
   In our view, our analysis applies equally to the question you pose as to
cases pending in the Court of Claims.




   10 As we read Leonard, § 2008(c) supersedes the statutory settlement authority o f the A t­
torney General only in areas within the sole prerogative o f the Postal Service.
   " The issue in Leonard was the policy o f hiring employees with arrest records not leading
to conviction unless the position was designated as sensitive or the charges were currently
pending. A strong argument could be m ade that this issue was not o f a nature peculiar to the
Postal Service but that it involved Government-wide employment policies closely related to
provisions o f title S, United States Code, which are applicable to the Postal Service pursuant
to 39 U .S.C. § 410(b)(1).

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  We realize that the practical application of our reasoning may be diffi­
cult. That, however, is the inescapable consequence of the hybrid status of
the Postal Service under the Postal Reorganization Act, i.e., the “ uneasy
and unresolved tensions between the dependent and independent aspects
of the new [Postal) Service.” Leonard, at 815.

                                      Le o n U lm an
                           Deputy Assistant Attorney General
                                               Office o f Legal Counsel




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