Postal Service must stop favoring Netflix DVDs over GameFly ones, says appeals court

A US appeals court has ruled in favor of GameFly in a long-running suit against the Postal Service, determining once again that the Postal Service gave preferential treatment to Netflix and Blockbuster by sorting their DVDs. In 2009, GameFly filed a lawsuit claiming that while postal workers manually sorted Netflix or Blockbuster envelopes for free to stop them from being broken, it refused to extend the same courtesy to GameFly, leading to high breakage rates and forcing it to ship with more expensive flat cardboard packaging.

In 2011, a lower court agreed that GameFly had indeed been wronged, but it rejected two proposed solutions: that the Postal Service either provide free manual sorting to GameFly as it did for other companies or substantially reduce the rate for flat pack envelopes. Now, the appeals court has ruled that this decision was faulty, especially because the justification was based on the fact that GameFly used flat packaging — something it was only doing in the first place because the Postal Service refused to treat its envelopes with the same care given Netflix.

“Without special manual processing like that afforded to Netflix,” the ruling says, “switching to letter mail could subject GameFly to an epidemic of cracked and shattered DVDs.” Now, the Postal Service will either have to offer the same service to all parties or explain once again why discrimination is justified. This ruling marks one of the last developments in a long-running case with significant repercussions for DVD-by-mail services, but it’s a little amusing to see it handed down at a time when Netflix is far better known for streaming than discs and even GameFly is moving to digital distribution.