A federal appeals court in Washington today revived a company's challenge of the alleged preferential treatment that the U.S. Postal Service gives to Netflix for rates and service terms.
The challenger, GameFly, which rents and sells video games to customers, asked the Postal Service for the same treatment that it provides Netflix, the movie rental company, when it comes to rates and service terms for sending DVDs through the mail.
DVD mailers, the U.S. Court of Appeals for the D.C. Circuit said today, tend to jam the Postal Service's automated, high-speed letter-sorting equipment. The machines, the court said, sometime break DVDs. That's a problem for GameFly, however, and not Netflix, whose DVD mailers are manually handled. Netflix isn’t charged extra for the service, the court said.
"The Postal Service has saved Netflix—apparently its biggest DVD mailer customer—from this crippling otherwise industry-wide problem by diverting Netflix mail from the automated letter stream, shifting it to specially designated trays and containers, hand culling it, and hand processing it," Chief Judge David Sentelle wrote today in the D.C. Circuit ruling. The opinion is here.