The U.S. Postal Service said yesterday that it will pay $51.75 million to postage meter giant Pitney Bowes Inc. to settle a dispute over a system that allows meter customers to purchase postage by telephone.
The Connecticut-based firm sued the federal agency in late 1997, alleging that it had effectively taken the company's property by requiring that Pitney's customers maintain their postage accounts with the Postal Service, not the company. At stake was the interest on accounts valued at more than $9 billion.
The Postal Service said in a brief announcement that a federal judge had upheld its right to issue new regulations covering the accounts but had ordered a trial on Pitney's claim for damages. Instead of allowing the dispute to be tried, the agency said it had agreed to make the payment to Pitney for "a portion of the financial benefit that the Postal Service obtained as a result of the revised regulations."
Pitney developed a "postage by phone" service in the 1960s. It enabled businesses to reset the value of postage in the company's rented meter machines by telephone. That avoided taking the machines to post offices and facing long waits in line.
In 1995, under then-postmaster general Marvin T. Runyon, the agency decided to revise regulations it had issued for meter companies. Under the new rules, the agency declared it would hold the accounts--in which customers were required to maintain a balance to cover future postage--and earn the interest on the money that previously had gone to Pitney.
Pitney said that action breached a 1978 "statement of understanding" it had with postal officials, which allowed the company to control interest on the postage accounts. When the lawsuit was filed, the Postal Service said it had ordered the change "in the best interests of postal service customers" and to ensure "the safety of more than $9 billion in customer funds."