Source: https://m.openjurist.org/310/f2d/606
Timestamp: 2020-06-05 01:17:15
Document Index: 6757858

Matched Legal Cases: ['§ 841', '§ 10', '§ 1009', '§ 8', '§ 1007', '§ 8', '§ 1006', '§ 8', '§ 8', '§ 8', '§ 16', '§ 4', '§ 5', '§ 1004', '§ 16', '§ 16']

310 F2d 606 Anglo-Canadian Shipping Company Limited v. Federal Maritime Commission | OpenJurist
310 F. 2d 606 - Anglo-Canadian Shipping Company Limited v. Federal Maritime Commission
310 F2d 606 Anglo-Canadian Shipping Company Limited v. Federal Maritime Commission
310 F.2d 606
ANGLO-CANADIAN SHIPPING COMPANY LIMITED, Canadian Occidental Shipping Co., Ltd., et al., Petitioners,
Rehearings Denied November 2, 1962.
Graham, James & Rolph, Leonard G. James, and Robert L. Harmon, San Francisco, Cal., for petitioners.
Lee Loevinger, Asst. Atty. Gen., Antitrust Division, Richard A. Solomon, Atty., Dept. of Justice, James L. Pimper, Gen. Counsel, Robert E. Mitchell, Deputy Gen. Counsel, and Thomas D. Wilcox, Atty., Federal Maritime Commission, Washington, D. C., for respondents.
Dorr, Cooper & Hays, San Francisco, Cal., and John Tilney Carpenter, New York City, for intervenor States Marine Lines, Inc.
Orrick, Dahlquist, Herrington & Sutcliffe, George Herrington, Christopher M. Jenks, and Robert Keller, III, San Francisco, Cal., for intervenors Port of New York Authority, City of New York, and State of New York.
Sidney Goldstein, General Counsel, F. A. Mulhern, New York City, Arthur L. Winn, Jr., Samuel H. Moermann, J. Raymond Clark, Burton Fuller, and James M. Henderson, Washington, D. C., for intervenors Port of N. Y. Authority.
The particular controversy which this case brings here has to do with a certain Rule 21 which is a part of the Pacific Coast European Conference traffic agreement. Copy of that Rule is set forth in the margin.1 It will be noted that through the adoption of this rule the members of the Pacific Coast European Conference have prohibited payment of brokerage exceeding certain stated percentages and in some cases have prohibited the payment of brokerage altogether. Thus Rule 21 is in violation of the Commission's order in respect to all those items which are specially listed as calling for something less than 1¼%.
The order here in question was purportedly issued pursuant to the provision just referred to, and upon the basis of a finding that concerted action by a group of carriers in the nature of Rule 21 above referred to, did operate to the detriment of the commerce of the United States. The emphasis here must be placed upon the word "concerted". The parties here agree that there is no law, rule or regulation which requires an individual carrier to pay brokerage to any one.2
It would appear that behind this finding was the view of the Commission that freight forwarders must be able to collect such brokerage in order to be able to stay in business in that compensation collected from the shippers alone was inadequate to support them. The hearing resulted in an order that the respondents should remove prohibitions against the payment of any brokerage from their conference agreements. This order was attacked by certain of the respondent conferences in Atlantic & Gulf/West Coast, etc. v. United States, D.C., 94 F. Supp. 138, heard by a three-judge district court in the Southern District of New York and the order was affirmed.
The order therein reviewed dealt solely with agreements not to pay any brokerage. However, the Commission added a dictum as follows: (p. 141, 94 F.Supp.) "On the other hand, as we have found that a prohibition against any payment of brokerage results in detriment to the commerce of the United States, we believe that any limitation below 1¼% of the freight involved, which is the amount generally paid by carriers in the various trades over a period of years, would circumvent our finding, and result in the detriment condemned."
The reviewing court noted that this was a dictum and carefully refrained from expressing any view as to whether the Commission could validly prohibit agreements to pay brokerage at a rate less than 1¼%.3 The same order reviewed in that case was also reviewed on the petition of certain other conferences by a three-judge district court in the Northern District of California in Pacific Westbound Conference v. United States, D.C., 94 F.Supp. 649. That court approved the decision of the district court for the Southern District of New York, above referred to, and denied relief against the order of the Commission.
Subsequently the successor Federal Maritime Board in a proceeding entitled The Joint Committee of Foreign Freight Forwarders v. Pacific Westbound Conference, Docket Nos. 718 and 719, had before it that Conference's Rule 30(b) which limited conference members to the payment to qualified forwarders of brokerage not in excess of certain stated amounts, less than 1¼%. For instance, on certain products the brokerage was limited to ¾% and on other commodities to 10 cents per ton. In this case, decided March 24, 1953, the Board, relying on the Commission's dictum in the proceedings previously mentioned, and calling it a "fundamental ruling" invalidated the provisions of Rule 30(b) and thereby actually decided that a limitation of brokerage rates to less than 1¼% was invalid.4 Thereafter, in a proceeding instituted October 22, 1954, in which the presently petitioning Pacific Coast European Conference was the respondent, the Board had before it for consideration the then Rule 21 of that Conference which contained not only the present provisions limiting brokerage on certain commodities to less than 1¼%, but also a provision requiring member lines to refuse to pay brokerage to any broker who solicits and receives brokerage from a non-conference competitor. The latter provision was held to be invalid and ordered eliminated from the Rule. The Board then proceeded to consider the question of the validity of the prohibitions of Rule 21 on the payment of brokerage and limitations on payment to less than 1¼%.
About the time that this ruling was handed down the forwarders, who doubtless were disappointed by this decision, took their case to Congress. The result there was the Act of September 19, 1961, Public Law 87-254, 75 Stat. 522, 46 U.S. C.A. § 841b, which provided for a system of licensing and regulating the business of forwarders, and also contained a provision stating that "a common carrier by water may compensate a person carrying on the business of forwarding to the extent of the value rendered such carrier in connection with any shipment dispatched on behalf of others when, and only when, such person is licensed hereunder and has performed with respect to such shipment" certain listed functions and duties with respect to the shipment. As this congressional enactment obviously put an end to the Board's proposal to stop payments of brokerage, the Board of course found it necessary to grant applications for reconsideration of its report and to cancel the order made thereon. By this time the present Commission had succeeded the Board and it reopened its Docket No. 831. On November 16, 1961, the Commission called for further proceedings in No. 831 in the following order: "IT IS ORDERED, that interested parties file briefs with the Commission on or before the close of business on December 5, 1961, directed solely to the issue of whether agreements between common carriers subject to the Shipping Act, 1916, prohibiting the payment of brokerage, or limiting the payment of brokerage to less than 1¼% of freight charges are, or would be in violation of said Act, as amended."
What the Commission then proceeded to do was to review its earlier decisions which we have described above, and particularly the one which was reviewed in Atlantic & Gulf West Coast of Central America, etc. v. United States, supra, and Pacific Westbound Conference v. United States, supra. It noted that the earlier holdings were based upon the Board's determination that the forwarding industry makes a valuable contribution and is essential to the United States commerce; that a "considerable portion of its revenue is derived from brokerage; and that it is detrimental to commerce to allow concerted carrier action that would, in its ultimate overall effect, seriously impair the function of the industry by depriving it of such revenue." The Commission then held and found as follows: "We conclude and find on this record that agreements between common carriers by water in the export foreign commerce which prohibit brokerage or limit the amount thereof to less than 1¼% of freight charges, operate to the detriment of the commerce of the United States and are contrary to the public interest, in violation of section 15 of the Shipping Act, 1916, as amended." In substance, what the Commission held was that it would adhere to the dictum indicated above in the earlier Commission decision.
What we find lacking here is compliance with those provisions of the Administrative Procedure Act which call for the production of evidence and the making of findings based thereon to support the conclusions of the administrative body. As noted in § 10 of the Administrative Procedure Act, (Title 5 § 1009 (e) (5)), this court as a reviewing court is charged with setting aside agency action "unsupported by substantial evidence" in cases of this kind. See Universal Camera Corp. v. N. L. R. B. Board, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456. This record is barren of any evidence as to just what effect Rule 21 has upon the survival of the freight forwarding industry. How does the Commission know that the brokerage payable under Rule 21 would amount to such an insignificant total as to cripple the freight forwarding industry? Our reading of the final decision of the Commission on this matter indicates to us that the Commission had nothing to go on except an earlier dictum, and one that the earlier Commission or its successors subsequently repudiated.
We recognize that there is some authority holding that findings may be based upon judgment or discretion or policy where the specific facts to support the judgment are not susceptible of proof.5 But we cannot say that this is that type of case. Rule 21 has been in effect and operation for a good many years. There must be an abundance of available evidence to disclose just how much brokerage has been actually paid under the operation of this Rule. Also available would be evidence as to the average earnings of freight forwarders; how much they need to live on; what their collections are from the shippers, and how much they have to get from brokerage. Does the difference between what the average forwarder receives from the shipper, and what the forwarder needs to survive, exceed the amounts payable and available under the operation of Rule 21?
The record is wholly wanting in any information that might answer these questions, but we think we can take judicial notice that evidence on this subject is obtainable, available, and can be procured.6 As the Supreme Court has said in matters calling for administrative determinations similar to this one: "There must be a full hearing. There must be evidence adequate to support pertinent and necessary findings of fact." Morgan v. United States, 298 U.S. 468, 480, 56 S.Ct. 906, 911, 80 L.Ed. 1288. This requirement of hearing applies to the respondent Commission. Isbrandtsen Co. v. United States, D.C. cir., 211 F.2d 51. Not only was there a want of hearing and evidence, but also a complete failure on the part of the Commission to conform to the requirements of § 8(b) of the Administrative Procedure Act, (Title 5 § 1007(b)), whereby parties are afforded an opportunity to propose findings and to note exceptions to decisions or recommended decisions. See Baltimore & O. R. Co. v. United States, 3 cir., 201 F.2d 795. No part of that section appears to have been taken into consideration by the Commission. As stated in Commonwealth of Puerto Rico v. Federal Maritime Board, 110 U.S.App.D.C. 17, 288 F. 2d 419, "The Administrative Procedure Act requires all decisions to state not only findings and conclusions, but also `the reasons or basis therefor, upon all the material issues of fact, law or discretion presented on the record * * *.' Section 8(b) 5 U.S.C.A., Section 1007(b). The Board `should make the basis of its action reasonably clear.'" See also Sec'y of Agriculture v. United States, 347 U.S. 645, 74 S.Ct. 826, 98 L.Ed. 1015; U. S. v. Chicago M., St. P. & P. R. Co., 294 U.S. 499, 55 S.Ct. 462, 79 L.Ed. 1023; Erie R. Co. v. United States, D.C., 59 F.Supp. 748, D.C., 64 F.Supp. 162.
The petitions assume that our decision requires the Commission to consider separately the rules of each Conference with respect to the payment of brokerage; and that the Commission was prohibited from issuing an order applicable to all Conferences based on evidence and findings with respect to the forwarding industry generally.1 There is no basis in the decision of this court for any such assumption as that made by these petitioners. We know of no reason why the Commission could not proceed simultaneously, as it did in this case, against conferences, or against all persons interested in the proceedings, or likely to be affected thereby. We found no fault with the fact that some sixty conferences were named as respondents in the Commission's proceedings; that circumstance constituted no part of the reasons found by us for our decision.
The provisions of § 8 are by its terms made applicable "in cases in which a hearing is required to be conducted in conformity with § 1006 of this title." This is such a case.2 The section last mentioned in turn refers to hearings in cases of adjudication.
Whether the number of respondents in a proceeding for adjudication before the Commission be one or sixty or one thousand there is no exception to the requirement of § 8(b) for findings sufficient to support the Commission's order. Those findings are completely lacking in this record. The cases holding that such findings are essential in an administrative proceeding such as this are legion.3 The general conclusion stated in the Board's final order and supplemental report, phrased in the language of the statute, does not conform to the requirements of the Administrative Procedure Act, nor does it satisfy the rule respecting the necessity of findings. The requirement of specific, definite and basic findings, other than mere ultimate findings or conclusions, is well settled. Thus in Florida v. United States, 282 U.S. 194, 213, 51 S.Ct. 119, 124, 75 L.Ed. 291, the Court said: "In the paragraph, which we have quoted, containing the ultimate finding of the Commission with respect to the unjust discrimination caused by the existing intrastate rates as between persons and localities, there is a concluding clause that the intrastate rates result `in unjust discrimination against interstate commerce.' This general statement in the language of the statute, neither standing alone nor taken in its context, could be regarded as sufficient to support a statewide order from the standpoint of income, in the absence of supporting findings of fact as to the revenue from the traffic in question."4
What the Commission here and apparently counsel for the Commission and for the intervenors, as well, have forgotten is this requirement of basic findings. What this involves was spelled out in clear language in Saginaw Broadcasting Co. v. Federal C. Com'n, 68 App.D.C. 282, 96 F.2d 554, 559. There after noting the necessity for findings of fact by administrative boards, and Commissions, and the reasons for that requirement, the court said: "In discussing the necessary content of findings of fact, it will be helpful to spell out the process which a commission properly follows in reaching a decision. The process necessarily includes at least four parts: (1) evidence must be taken and weighed, both as to its accuracy and credibility; (2) from attentive consideration of this evidence a determination of facts of a basic or underlying nature must be reached; (3) from these basic facts the ultimate facts, usually in the language of the statute, are to be inferred, or not, as the case may be; (4) from this finding the decision will follow by the application of the statutory criterion."5 See also United States v. Chicago, M. St. P. & P. R. Co., 294 U.S. 499, 510, 55 S.Ct. 462, 79 L.Ed. 1023.
It will be noticed also that § 8(b) of the Administrative Procedure Act requires not only findings, but "supporting reasons" for such findings. These are wholly lacking here. That section also requires that prior to the decision the parties shall be given an opportunity to except to the proposed decision and findings. There is complete absence of any attempt to comply with that requirement here. Indeed, in the light of findings which had previously been made by the examiner and by the Commission in this same matter, the failure to comply in any manner with the requirements of § 8(b) is unaccountable. Just prior to the issuance of the final decision in this case the parties to the proceedings had available to them only the recommended decision of the examiner dated March 7, 1960, and the decision and findings of the Federal Maritime Board dated June 30, 1961.6 In its previous decision the Board found as follows: "The record has been searched in vain for any probative evidence indicating that the prohibition of brokerage payments would have any adverse or detrimental effect upon the foreign commerce of the United States, limiting the definition of `foreign commerce' to the actual movement of goods in the export trades, and the promotion and development of such trades. There are numerous general assertions in the record, by forwarders and others, that if brokerage is eliminated entirely the forwarders will perforce need to increase their charges to shippers in order to recoup the lost revenues, that numerous commodities move in export on which the profit margins are narrow which could not stand the imposition of increased forwarding charges, and that the movement of such commodities would thus be adversely affected. No shipper testimony to this effect was adduced, and the shipper testimony of record, from shippers who perform their own forwarding services and do not receive brokerage, indicates to the contrary."
Some of the forwarding agents' witnesses before the Board testified that they should receive brokerage of 1¼ percent of freight charges. On the other hand, witnesses interested in the steamship lines testified that in their opinion the provisions of the respondent's Rule 21 were reasonable and justifiable.7
"Pacific Coast European Conference Tariff No. 13 — General Rules Section — 21. FREIGHT BROKERAGE. Member lines are permitted to pay brokerage ONLY to firms whose names appear on the Conference's list of Approved Freight Brokers
"No brokerage may be paid ABROAD, nor on Heavy Lift or Extra Length Charges, nor on cargo covered by bills of lading showing as shipper a broker's name followed merely by the words `as agent(s)', e. g., `John Smith Forwarding Company, as agent'.
On Grain, in bulk or in bags,    |
On Grain Products,               |
On Flour, viz., Barley, Corn,     >  ¾%
Rye or Wheat,)                  |
On all commodities named in
`Lumber Section' of this Tariff,     1%
On Open Rate
Commodities NOS.                     1%
On `NET RATE'                      No brokerage
CARGO, viz.,                      payable.
Borates, Crude or Refined
Brick, Infusorial Earth
Citrus Fruit, under refrigeration
Cotton and Cotton Linters
Earth, Diatomaceous or Infusorial
Lead, viz. Bars, Billets Pigs or Slabs
Plywood, Douglas Fir
Refrigerator Equipment as
shown in tariff item so
Salmon, Hard Salt or Mild Cured, under
Zinc, viz., Bars, Blocks, Ingots,
Pigs or Slabs
On all other Cargo                   1¼%
Some of the briefs suggest that there is a practical compulsion upon an individual carrier to pay brokerage. Since in practice the forwarder often selects the ship on which cargo space is arranged for, the suggestion is that a carrier who failed to pay the customary brokerage to a forwarder would find little demand for his cargo space. This undoubtedly explains the practical reason for the concerted adoption of a rule like Rule 21 to which all members of the Conference are required to conform
(D.C., 94 F.Supp. p. 142): "The Commission's order directs merely that plaintiffs' agreements not to pay brokerage be eliminated. Individual carriers are left free, subject to their own judgment and the ordinary operation of lawful competition, to pay or not to pay. The Commission's report did not go so far as to state that all agreements relating to the payment of brokerage would be disapproved, although it considered that an agreement to pay less than 1¼ percent would perpetuate the condemned detriment. Payment of brokerage is not compelled. No more is done than to subject the carriers to normal competitive conditions. It would thus be premature for us to consider whether the Commission could validly order the payment of brokerage and whether the designation of 1¼ percent as the minimum rate for agreements is justified. The order is silent on these subjects, and brokerage payments and the 1¼ percent minimum may never be prescribed."
What the Board actually said was that "limiting brokerage rates to less than 1¼% of the ocean freight involved [is] in violation of the Commission's order in Docket No. 657." As we have noted, this cannot be true, but the decision permits an inference that it was ruled that a conference agreement so limiting brokerage was detrimental to commerce
See the discussion of such cases in Davis Administrative Law Treatise, § 16.11
It cannot be said that the fact that Rule 21 provides that on some commodities no brokerage may be paid, this rule or a portion of it operates in a manner detrimental to commerce. As we indicate here, the basic question is the impact of the Rule taken as a whole on freight forwarders and their business. And additionally, there is suggestion in the record that some of these "no brokerage" commodities, such as Borax are shipped by sellers who use no forwarder, but arrange shipment through employees on their own staffs. Receipt of evidence might disclose that such is generally true with respect to other listed items
After this case had been first argued before us, we called for additional briefs from the parties upon certain questions propounded by us for answer including the question whether the proceeding before the Commission was instituted as a proceeding for rule making, as contemplated by § 4 of the Administrative Procedure Act, rather than a proceeding for adjudication as contemplated by § 5 of the same Act, (5 U.S.C. § 1004). Supplemental briefs were filed in which all parties unanimously agreed that this was a proceeding for adjudication
Many of them are collected in Davis, Administrative Law Treatise, Chap. 16, §§ 16.01 to 16.14
This case is discussed in a note on "Necessity, form, and contents of express finding of fact to support administrative determinations" in 146 A.L.R. 209, at pp. 220, ff., where it is referred to as a leading case
The recommended decision of the examiner was as follows: "The principal basis for the prior decisions in holding that conference prohibitions against the payment of brokerage, or limiting brokerage to less than 1¼ percent of ocean freight charges, would be detrimental to the commerce of the United States, is found in the finding in Agreements and Practices Re Brokerage, supra, at p. 177 that such conference actions have had and will have a serious effect upon the forwarding industry. This finding can be supported on this record, as urged by the forwarders and a number of other parties, but only if it is assumed that forwarding fees must remain at unremunerative levels with resulting indirect rebates to shippers and general disregard of the requirements of § 16 of the Act prohibiting rebates, discrimination, preference, and prejudice. On the other hand, the unregulated payment of brokerage has resulted in substantial payment by the carriers of unearned brokerage, as disclosed on this record, with consequent unnecessary dissipation of carrier revenues creating upward pressures upon ocean freight charges to the detriment of the commerce of the nation