RECEIVEII
BEFORE THE
POSTAL RATE COMMISSION
UC1 6
I 21 PM ‘97
POSTAIRATECOH,di:S,CH
OFFICE OF Ttii
POSTAL RATE AND FEE CHANGES,
1997
;
SiCdi:TARY
DOCKET NO. R97-1
MOTION OF UNITED PARCEL SERVICE TO COMPEL
PRODUCTION OF INFORMATION AND MATERIALS REQUESTED IN
INTERROGATORIES
UPS/USPS-T3344(b)-(c),
45(e)-(h), (m)-(p), 47(e)-(h), (m)-(p),
48-50, AND 57-58 TO POSTAL SERVICE WITNESS SHARKEY
(October 6, 1997)
United Parcel Service (“UPS”) hereby moves that the Presiding Officer
overrule the objections filed by the United States Postal Service (“Postal Service”) to
interrogatories
UPS/USPS-T33-44(b)-(c),
and 57-58 (the “Interrogatories”)
information
45(e)-(h), (m)-(p), 47(e)-(h), (m)-(p), 48-50,
and order the Postal Service to produce the
and materials requested in those Interrogatories.’
request information directly relevant to this proceeding
The Interrogatories
and do not require the
disclosure of any trade secrets, or proprietary or commercially
sensitive information
relating to the Postal Service’s Priority Mail Processing Center (“PMPC”) contract with
Emery Worldwide
Interrogatories
1.
(“Emery”).
Thus, the Postal Service’s objections to those
are without merit.
After discussion between counsel for UPS and the Postal Service, UPS has
withdrawn interrogatory UPS/USPS-T33-52(c).
Backaround
A brief review of the facts is necessary to provide the proper context for
this dispute.
On July 24 and 28, 1997, UPS filed interrogatories
network’s operations and costs. Those interrogatories
widespread
on the PMPC
were prompted in large part by
press reports that the Postal Service had entered into a $1.7 billion contract
with Emery for Priority Mail operations extending through the test year and beyond.
In
light of these public reports, UPS sought discovery intended to determine the obviously
substantial test year costs of the Postal Service (m any costs of its contractor,
Emery)
under the contract.
On August 4, the Postal Service objected to most of those interrogatories,
asserting that they called for the disclosure of protected information.
Pollowing
discussions with Postal Service counsel, UPS, on August 15, found it necessary to file
a motion to compel production of the information and materials requested in the
interrogatories.
On August 22, the Postal Service filed its opposition to the motion and
requested the Presiding Officer to defer a ruling until counsel for UPS would have an
opportunity
to review a redacted version of the PMPC contract to be filed by the Postal
Service.
The Postal Service subsequently
of the PMPC contract.
filed (on August 28) a redacted version
See Library Reference H-235. On August 29, t:he Presiding
Officer issued Ruling No. R97-1112, which gave UPS until September 8 to review the
redacted PMPC contract and to move to compel production of a more complete version
of the contract.
As the result of an agreement between counsel concerning the Service
-2-
4365.56
of specific interrogatories
by UPS, on September 8 UPS filed a motion to extend the
time for it to seek production of the PMPC contract, to give counsel for UPS and
counsel for the Postal Service an opportunity to informally resolve, or at least narrow,
the controversy.
As a result of its review of the redacted PMPC contract, and in an effort to
avoid further motion practice, on September
11 UPS filed additional, very specific
interrogatories
concerning the costs of the PMPC network.
interrogatories
at issue here. On September 22, the Postal Service objected to most of
the Interrogatories.
On September 26, Emery filed a memorandum
Expression On Release Of Proprietary And Confidential
“Memorandum”),
Those are the
Information”
entitled “Informal
(the
joining in the Postal Service’s objections to the Interrogatories
suggesting additional, far more stringent
and
protective conditions than those requested by
the Postal Service.
Despite additional discussions between counsel for UPS and counsel for
the Postal Service, no agreement
has yet been reached.
As a result, UPS remains
without much of the requested information concerning the costs to the Postal Service of
the PMPC network, despite the fact that cross-examination
of the Postal Service’s chief
witness on Priority Mail (Mr. Sharkey) is just days away.
-3-
436566
Argument
A.
The Information Requested in the
Interrogatories Is Highly Relevant And Is Not
Proorietarv or Confidential.
As a threshold matter, UPS wishes to emphasize that it is interested only
in what the Postal Service is paying to handle Priority Mail, and is m
information
concerning
interested in any
Emerv’s costs. There is no question that what the Postal
Service will pay in the test year to process Priority Mail is directly at iss,ue in this
proceeding,
information
and it is a red herring for the Postal Service to refuse to provide that
by claiming that it does not want to disclose Emerys proprietary
business
The Postal Service’s objections (and Emery’s Memorandum)
are based
information
on the unfounded premise that the Interrogatories
proprietary
business information.
call for disclosure of Emery’s
That simply is not so. What the Postal Service will
pay under the contract does not reveal what Emery’s costs are -- it only reveals what
costs will be incurred by the Postal Service under the PMPC contract, which is no
different from any other cost information provided by the Postal Service (m,
information
on purchased transportation
costs).
Indeed, the Postal Service has already produced, in this oroceedinq,
other
contracts with outside vendors which contain information similar to that requested in the
Interrogatories.
For example, Library References
H-249 and 250 are the WNET and
TNET network contracts between the Postal Service and Evergreen International
436556
Airlines, Inc., and Evergreen Aviation Ground Logistics Enterprises,
Inc., respectively.
In those contracts -- even in their redacted versions -- the Postal Service provides
information concerning the prices paid by the Postal Service and estimated originating
and destinating volumes for soecific locations under each contract, information of the
type that it now refuses to provide for the PMPC contract.
See. e.a., EYxhibitA (excerpts
from the WNET contract, Library Reference H-249), and Exhibit B (exc:erpts from the
TNET contract, Library Reference H-250). And Library Reference H-251, the ANET
network contract between the Postal Service and m,
location.
m
reveals volumes bv soecific
Exhibit C (excerpt from Library Reference H-251).
The Postal Service cannot have it both ways -- it cannot selectively
choose to produce certain information for certain contracts while at the same time
withholding similar information in other contracts.
and volume information
the confidentiality
By producing the same type of cost
in other contracts, the Postal Service has demonstrated
that
claims it now invokes with respect to the PMPC contract are
specious2
The Interrogatories
were carefully and narrowly crafted to request strictly
that information relating to what the Postal Service will pay for the services provided
under the PMPC contract, and to avoid requesting the disclosure of any information
2.
Alternatively, there has been a waiver of any othemise valid confidentiality claim.
See, e.a., Wichita Land & Cattle Co. v. American Fed. Bank, 148 F.R.D. 456,
457 (D.D.C. 1992) (“Disclosure of otherwise-privileged
materials, even where the
disclosure was inadvertent, serves as a waiver of the privilege.“); Chinnici v.
Central DuPaae Hoso. Ass’n, 136 F.R.D. 464, 465 (N.D. Ill. 1991) (“Production of
some privileged documents waives the privilege as to all documents of the same
subject matter.“).
-5-
concerning
Emery’s costs, profit, or pricing strategies.
Presumably,
what the Postal
Service is to pay under the PMPC contract is different from what Emery’s costs will be
in performing under that contract; the Postal Service will pay an amount equal to some
unidentifiable
(and unasked for) amount of Emery’s costs, plus overhead, profit, and
any other element Emery was able to negotiate,
Thus, disclosure of what the Postal
Service will pay will not in any way disclose information concerning
give UPS a “competitive
Emery’s costs or
advantage.”
Moreover, not only are the Postal Service’s claims of proprietary
business
information totally unjustified, but they are also excessive in scope and! the protective
conditions it requests are unnecessary.
For example, the Postal Service objects to
Interrogatory
UPS/USPS-T33-57
as calling for proprietary information.
That
interrogatory
merely requests that the Postal Service “provide unredacted versions of
the table of contents for the PMPC contract and of the Iable of contents for the
Statement of Work (Attachment
1 to the contract)” (emphasis added).
This information
was requested in place of a request for a detailed privilege log describing the redacted
information, so that the Postal Service’s redactions and confidentiality
properly evaluated.
“proprietary
claims could be
The Postal Service’s claim that such innocuous information
information”
is clearly overbroad.
is
Significantly, the redacted versions of
the WNET and TNET contracts (Library References H-249 and H-250) provide a
complete table of contents.
Similarly, the Postal Service objects to Interrogatory
UPS/USPS-T33-58
and seeks protective conditions for any response it might give. That interrogatory
makes the straightforward
request that the Postal Service “provide that portion of the
total price to be paid by the Postal Service under the PMPC contract that relates to test
year (FY 1998) operations for the PMPC network.”
relevant to this proceeding,
does not require the disclosure of any information
even conceivably “proprietary,”
concerning
Clearly, that request is directly
and does not require disclosure of m
that is
information
Emery’s costs or other allegedly confidential data.
These interrogatories,
as well as the other UPS interrogatories
objected to
by the Postal Service (all requesting information on the Postal Set-vice3 costs and
volumes under the contract), do not require the disclosure of any “proprietary”
confidential
information,
information
is demonstrably
or
and the Postal Service’s claim of a need to protect this
without merit. The information is highly relevant to the test
year costs of Priority Mail. Indeed, it is the best evidence of what a substantial
portion
of those costs will be -- better than roll-forward estimates.
Accordingly,
UPS respectfully submits that the Presiding Officer should
order the Postal Service to respond in full to the Interrogatories,
and should produce the
requested information and materials without the imposition of needless and
burdensome
protective conditions,
;
.
B.
The Requested Protective Conditions Are
Undulv Burdensome.
UPS takes exception to the abnormally stringent conditions of access
proposed in the Memorandum
factual inaccuracies
filed by Emery.
Emery’s Memorandum
and sweeping but unsupported
is based on
statements concerning the need for
and customary nature of Emery’s requested protective conditions, all based on the
unfounded assertion that the Interrogatories
will require the disclosure of Emery’s costs
and other proprietary information.3
For example, Emery claims that “Revealing this information would be
tantamount
to revealing Emery’s costs and pricing strategies
Emery is wrong.
the Interrogatories
(presumably)
,” Memorandum
at 1.
The PMPC contract is a negotiated deal. The information sought in
relates solely to the orice the Postal Service Days., which
is composed of Emery’s undisclosed costs plus some undisclosed
profit.
There is no way for UPS to determine -- nor does UPS care to determine --what
portion
of the amounts requested is cost or profit, and Emery’s claim that such information
would give UPS some unspecified “unfair competitive advantage”
is without merit.
Moreover, the protective conditions suggested by Emery would impose
needless restrictions on counsel, the consultants,
3.
and the parties.
In these
For example, at page two of its Memorandum, Emery states that the redacted
PMPC contract was produced under the Freedom of Information Act. In fact,
while UPS also requested the contract in a Freedom of Information Act request,
the redacted contract was produced in response to UPS’s discovery requests in
&:-.-r;>;losition
of United States Postal Service to UPS Motion
this proceeding.
to Compel Information aI>u Materials Requested in Interrogatories UPWJSPST33-1 (c) and 2(a)-(c) to Witness Sharkey, dated August 22, 1997, at 6.
Similarly, at page five of its Memorandum, Emery states that information
responsive to the Interrogatories would reveal Emery’s costs and pricing
strategies for a variety of geographic city-pairs and regions. In fact, the
Interrogatories do not request any information by origin-destination pairs.
Indeed, the Interrogatories go out of the way to purposefully and specifically
state that information need be given only in the aggregate, and not for individual
origin-destination pairs, See. e.a., interrogatory UPS/USPS-T33-45,
requesting
price and volume information “in aggregate” and “collectively (k, not for each
origin-destination pair, but for all such pairs together).”
CirCUmStanCeS, where protective conditions are not even warranted, several of the
restrictions suggested
by Emery are simply unfathomable.
For example, among the protective conditions urged by Eimery are
requirements
that consultants
must provide detailed resumes and disclose the identity
of some of their firm’s clients; describe the work performed for those clients for the two
years preceding this case: and describe the scope of the work they are to perform in
this case. They must even disclose information concerning their spouses.
Outside
counsel would be required to supply a listing of, and provide an explanation for, all
attorneys in the firm who, for whatever reason, cannot agree to all the representations
and requirements
contained in the proposed protective order even though such
individuals will not have access to the requested information.
extreme and unnecessary,
and belittle the professionalism
These restrictions are
of all involved.
Despite Emery’s bald assertion that these types of protective conditions
are adopted “universally”
by federal courts and administrative
agencies, UPS contends
that the conditions in the proposed protective orders are unusually and grossly
excessive.
Protective conditions of any type -- let alone draconian conditions such as
these -- are unwarranted
in these circumstances,
and the Presiding Officer should not
impose such needless burdens on the parties.
-9-
436566
Conclusion
For the foregoing reasons, United Parcel Service respectfully submits that
the Postal Service’s objection to interrogatories
UPS/USPS-T33-44(b)-(c),
45(e)-(h),
(m)-(p), 47(e)-(h), (m)-(p), 48-50, and 57-58 to Postal Service witness !Sharkey should
be overruled, and the Postal Service should be ordered to produce the information and
materials requested in those interrogatories
within seven days of the Presiding Officer’s
order.
Respectfully submitted,
Albert P. Parker, II
Stephanie Richman
Attorneys for United Parcel Service
SCHNADER HARRISON SEGAL & LEWIS
1600 Market Street, Suite 3600
Philadelphia, Pennsylvania 19103-7266
(215) 751-2200
and
1225 Eye Street, N.W., Suite 600
Washington, D.C. 20005-3914
(202) 463-2900
LLP
Of Counsel.
-IO-
CERTIFICATE
OF SERVICE
I hereby certify that I have this date served the foregoing document in
accordance with section 12 of the Commission’s
Dated: October 6, 1997
Philadelphia, PA
Rules of Practice.
2-BAFO
PC&Form 7405
In compliance with Solicitation Number WNET 92-01, the above named
offeror proposes to provide the service called for in said solicitation at the
rates of compensation set out below.
Daily Rate
Aircraft
Aircraft Crews
Aircraft Maintenance
Aviation Services
Aviation Fuel
Hub Operations
Outstation Operations
General 8 Administration
Profit
Total
An,nuaf Rate
. g-660.074
1,922,532
939.824
668.930
4.263334
998.412
2.079,279
1544.692
31.987
6,366
3,112
2,215
14.117
3.306
6.885
5.446
472.932
1,566
:-Do
The offeror certifies that this proposal is made in its own interest and not by
It as the representative
of another person or company and with full
knowledge of the required conditions of service.
This proposal is made in good faith and with the intention
contract to perform service if the proposal is accepted.
Name of Offeror:
EVERGREEN INTERNATIONAL
Signature of
AIRLINES, INC.
the Offeror:
Printed name:
Title:
RONALD A. LANE
VICE CHAIRMAN OF THE BOARD
UNITED STATES POSTAL SERVICES
Contracting
Name:
Title:
Officer:
8
??
v+ZZ
R.M. Maytan, General /Manager
Alr Contracts Management Division
pag*zo12
EXHIBIT
A
to enter into
~
The offeror
may propose "multi-stop"
segments providing
that
the proposal
is in keeping with the tender
and dIelivery
times listed
above.
If a network
aircraft
is utilized
on a
"multi-stop"
segment, the Postal Service reserves
the right to
transport
mail to the full
capacity
of the aircraft
between
origin,
destination
and intermediate
air stop points.
8.
Aircraft
sufficient
minimum,
folloving
Air
Lift
Capabilities
capacity
to
the originating
air stops:
- the aircraft
provided
must be of
be able to safely
transport,
at a
and destinating
volumes
for the
Oriuinatino
BtOD
Am
DEN
1,000
11,000
LA.9
LAX
3,000
14,000
6,000
PDX
PHX
SAN
SEA
pounds
aircraft
9,000
1,000
2,000
11,000
Total
30,000
13.000
13,000
24,000
7.000
100,000
100,000
The above figures
Offerors
should
of mail
mcr cubic
cubic capacity.
are stated
as volume! of mail in
utilize
a density
factor
of 7.0
foot
to.calculate
the necesssary
The successful
offeror
will
be required
to
the limit
of the aircraft's
lift
capacity,
capacity
exceeds that as listed
above.
9.
Rub Facility
sufficient
in
loose sack and
from inclement
carry mail up to
even vhere such
the contractor
must provide
a suitable
area,
that vi11 support
both
size and composition,
containerized
sorting
which protects
the mail
weather,
damage and theft.
The contractor
must also provide
for Postal
Nanagement.
10.
Volume
2,000
12,000
2,000
23,000
7,000
9,000
OAK/SF0
SK.
Note:
pounds.
Dcstiaatina
Volume
office
space at this
facility
must transport
mail in air
contaimeriz8tion
- the contractor
cargo containers
to the greatest
extent possible..
All loading
and unloading
of mail from and to air cargo containers
vi11 be
At LAX
ihe
responsibility
of the contractor
except at LAX.
to load
all.. originating
the contractor
vi11
be required
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REViSZD
9/l 6/92
SOLICITATION
hVMBER:
In ccmpliancc with Solicir;ltion No. TNET-93-01.
provide the service called for in said solicitation,
WET-934
ths above named offeror pm~poscs to
st rhc mtes ol compensstiorl SC: out below.
Personnel
S 5.362,177
Leased
Equipment
Owned
Eq&pmcnr
S
S
Maintcnnncc
s
Utilities
S
Supplies
s
S
$
$
$
IUSUCNICC
Other
Gcncrsl
& Adminisrrsrivc
Profit
offcrrds
Proposed TotsI Price
0
475,612
403.473
531,080
280,127
74,431
469,500
1,209,617
I .270,337
l
S 10.076.354
This MotmaIion is taken directly from tie supporting cost sheerr, PS Form:5 7405A md
supporting lists *rc nluchcd scpsrsuly.
740SB. which follow.
I
Owned Equipmem has bwn revised to reflect delction
carpet and phone insullation.
of
PAGE 2 or 3
AIRTERMINAL
HANDLING COh?RACTOR COSTS UMMARY SHE3
OFHROR
EVERGREEN AVIATION GROUND LOGISTICS -ES
_
VARlA-l-lONS IN BASE CASE COST PROPOSAL
1. Base Case Daily Volume:
450.000 pounds
Additional Cost per thousand pounds to handle
45O.ooO pounds and 6CO.000 pounds.
Cost per 1.000 pounds:
$15.43
daily volume between
1450-SOOKI.51
Cost items included in the con per I.000 pounds other
cn!s of additional labor
Far dailv volume
(500 ~-mKl
than rhc
rids) over 5
uo to: 2 Belt Loaders. 3 Cargo Tues. 1 Container Loader
2.
Base Case Daily Volumes of More or Less thau 450,ooO Pounds
Numbers of Workers and Total Annual Cosr for Base Case Daily Volumes
Grcacr or Less than 450.000 Pounds.
Baw Case Daity
Volume (pounds)
’
_I
TomI Number
of Workers Required
Total Annual
cost & Profit
500.000
291
6)
10.317.434f -
475,000
279
10.199.395 -
450,000
(Same as Proposed in PS 7405A)
425.000
271
10.003.754 -
400.000
264
9.926.154 -
PS FORM 7405B
PAGE
1 of 1
D.
OPERATION
6.
PERFORMAKCE
DESCRIPTION
a. SCHEDULE
STANDARDS
ADHERENCE
The ATHC agrees to adhere to the arrival
and departure
schedules established by &the Postal Service.
(see ATHC HUB
ARRl-VAL./DEPARl’URE
PROFILE below)
(Pan III. Su:. I, lb.lc
and Part IV, Sec. M Exhibit 3).
ATHC HUB ARRlVALIDEPARTLJRE
PROFILE
Arrival
ARRV
ROlJlTNG
A/C
VOLU?vE
PIECES
A/C
STACE
A/C
CAT
0109
0115
1026
0133
0135
0139
0144
0156
0158
0218
0230
0239
0245
0250
0301
0304
0306
63#>fj
0310
JFK-IND
BUF-CLE-IND
ORD-IND
RIC-BWI-IND
MCI-STL-IND
PHL-PIT-IND
GRR-DTW-IND
BOS-BDLIND
‘IPA-JAX-IND
SAT-DFW-IND
SJU-MIA-IND
CLT-ATLIND
MSP-IND
SEA-IN-D
MSY-IAH-WD
SAN-PHX-lND
DEN-IND
SPO-IND
LAX-ND
IND
727-200
727-100
727-100
727- 100
727-100
727-100
727-100
727-200
727-100
727-100
727-200
727-100
727-100
727-100
727-100
727-100
727-100
727-100
727-200
Surface
39691
16695
24864
26786
23495
23295
15936
36008
25892
28577
32747
29642
22186
8908
15845
16673
19940
16633
24536
32131
480480
2835
1193
1776
1913
1678
1664
1138
2572
1849
2041
2339
2117
1585
636
1132
1191
1424
1188
1753
2295
34320
III
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
11
(All
times are local)
288
III
III
III
III
III
III
III
Departure
0340
0342
0348
0352
0358
0400
0402
0404
0406
0409
0412
0415
0418
0421
0423
0425
0430
0435
0440
ROUTING
A/C
VOLUME
PIECES
IND-JAX-TPA
IND-MIA-SJU
IND-BDL-BOS
IND-JFK
IND-IAH-MSY
IND-DFW-SAT
Ih’D-DEN
IND-A-l-L-CLT
IND-MSP
IND-PHX-SAN
IND-BWI-RIC
IND-CLE-BUF
IND-PIT-PHL
lND-STL-MCI
IND-LAX
IND-ORD
IND-DTW-GRR
IND-SEA
DID-SF0
IND
727-100
727-200
727-200
727-200
727- 100
727-100
727-100
727-100
727- 100
727-100
727-100
727-100
727-100
727-100
727-200
727-100
727-100
727- 100
727-100
Surface
23502
27224
29656
39228
17215
29657
15294
23335
17434
15924
26354
17296
26807
20280
31933
24199
15223
21175
24496
34248
480480
1679
1945
2118
2802
1230
2118
1092
1667
1245
1137
1882
1235
1915
1449
2281
1729
1087
1513
1750
2446
34320
(All
limes
OIUG~FSJ-INATION
45317
40316
PVS
46020
45OPU
PVS
PVS
PVS
Day& &I AMF DAY
Lmisvillc, KY Al5 SDF
Indianapolis. IN AMF tND
Columbus. OH AMF CMH
Ciicinnti,
OH AMF CVG
Indianapolis, IN AMF IND
Indianapolis. IN AMF IND
Indianapolis. IN AklF IND
0115
0115
0130
0130
0200
0200
0230
0300
HCR= Highway Conuact Route
PVS= Postal Vehicle Service
289
1:II
I,II
I I1
1:II
I II
II
III
III
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
II
arc local)
ATHC SURFACE TRANSPORTATION
I+=
NC
A/C
STAGE CAT
PROFILE
0400
0350
0200
0350
0350
0240
0330
0350
22'
45'
45-48'
48'
48'
45-G
45-48'
45-48'
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2.752
ML
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2117
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1667
25115
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CL1
6121
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