Postal Service Seeks Extension in GameFly Complaint

12 Oct, 2009 By: Erik Gruenwedel

The U.S. Postal Service has asked for additional time (until Oct. 19) to respond to multiple discovery request motions filed by plaintiff GameFly, the online video game rental service.

GameFly April 23 filed a complaint with the USPS alleging discrimination and that it provided “unreasonable preferences” in rates and handling practices to Netflix and Blockbuster when dealing with DVD mailers.

Specifically, the Los Angeles-based service contends that to meet the 1-ounce first class mail weight limit, it has experienced a surge in broken discs due to absence of protective inserts in mailers. Adding the inserts bumps the mailer to 2 ounces, increasing postage from 42 cents to $1.

Most first class mail is processed via automated letter processing machines.

GameFly said it ships about 590,000 game rental discs per month and receives about 510,000 discs in return.

The postal service, which said the motion delay was due to issues raised affecting third parties and how it might “set ground rules for non-public treatment of proprietary documents,” has told GameFly it could alter its mailer to better accommodate the postal service’s automated systems.

GameFly, however, contends that in visits to postal distribution centers, it had noticed that large percentages of DVD rental mailers from Netflix and Blockbuster had been “culled” from the machines for hand processing.

The complaint alleges the postal service has not offered to provide its mailers with the same personalized service despite being requested to do so.

GameFly said the situation has been acute after Blockbuster announced it would begin offering game rentals by mail.

“GameFly now faces direct competition from a rival that is larger and longer established — and which, because of preferential treatment given by the Postal Service, enjoys a substantial cost advantage in the distribution of its DVDs to consumers,” said the complaint.

GameFly is seeking identical mailing pricing and handling afforded Netflix, Blockbuster and other DVD rental services, among other relief.