Earl Warren: Atchison, Topeka & Santa Fe Railway Company et al., Appellants, versus Elvin L. Reddish et al. and Number 53 and 54. Is Mr. Rice or Mr. Ginnane first? Yes sir.
Robert W. Ginnane: Mr. Chief Justice, may it please the Court. I'm appearing on behalf of the Interstate Commerce Commission, and I am sharing my time with Mr. Rice who is the counsel for the rail and motor carriers who intervene in the proceeding before the Commission and in the court below. This is a direct appeal from the final judgment of a three-judge court in the Western District of Arkansas. That judgment set aside in order of the Commission, which denied the application of Mr. E. L. Reddish for a contract carrier permit. This case, like the prior J-T case involves recurring and important questions as to the relative rules of common carriage and contract carriage in the public transportation system. He's the coordinator of transportation as pointed out back in 1934. These problems plagued state regulation prior to federal regulation. They were an issue when federal regulation begun in 1935. They were again posed in the litigation before this Court in the Contract Steel Carriers case and they were posed again, we think by the lower court's interpretation of the 1957 Amendments which followed this Court's decision in the Contract Steel Carriers case. Like J-T but upon different facts, this case involves the question of whether in determining an application for a contract carrier permit, the Commission is precluded from considering an affirmative showing by protesting common carriers that they are able and willing to provide an adequate service to the shipper. The case also involves two additional questions, questions which are not common to the J-T case, whether the Commission's findings as to the effect of a denial upon the supporting shipper were supported by substantial evidence and whether in determining the effect of a denial upon the shipper.
Felix Frankfurter: Would you mind repeating the first question that is --
Robert W. Ginnane: Whether the Commission's findings as to the effect of a denial upon the supporting shipper are supported by substantial evidence.
Felix Frankfurter: And you say that was not involved in the other case?
Robert W. Ginnane: But on different facts.
Felix Frankfurter: Oh yes. I thought you said there are two additional problems here?
Robert W. Ginnane: Yes. But this is an evidentiary problem peculiar to this case. That's all I meant to say. The third question is whether in determining the effect of a denial on the shipper, the Commission must give consideration to the proposed lower rates of the applicant for a contract carrier permit. This all began in May 1958 when Mr. Reddish applied for a contract carrier permit.
Speaker: (Inaudible)
Robert W. Ginnane: To the lower rates or the proposed lower rates.
Speaker: (Inaudible)
Robert W. Ginnane: Well, on this record, it must be rates because there were no costs in the record at all and not too much on rates. And the way the court below put it was in terms of rates reflecting inherently lower cost but with nothing in this record on anybody's cost.
Speaker: (Inaudible)
Robert W. Ginnane: But there was nothing in there as to what per se these were, just generalities. And as I say that there -- I will point out shortly, there's very little in there as to what the actual rates were for that matter to say nothing of the cost.
Earl Warren: Did the Commission propose to hear parties on that issue?
Robert W. Ginnane: The Commission in the hearing before the hearing examiner, there were some evidence offered on cost and it was not excluded.
Earl Warren: It is what?
Robert W. Ginnane: Not excluded. I mean evidence as to rates was received. The Commission on its report held that in this, as in other cases involving determinations for applications for either common carrier certificates or contract carrier permits, it would not go into the matter of rates. That would restrict this determination to the issues of service. They say Reddish applied for a contract carrier permit to transport canned food, mostly seasonal vegetables for three canning companies in Springdale, Lowell and Fort Smith Arkansas and Westville, Oklahoma to customers located at points in 33 states, and to move materials and supplies used in canning from points in 30 of those states back to the four manufacturing points. And the geographical scope of the requested authority is pretty well-Illustrated in a map which appears in the record at pages 32 and 33. After the usual administrative proceedings, Division 1 of the Commission issued its report denying the application, and a petition for reconsideration was denied by the entire Commission. Thereafter, the three-judge court set aside the Commission's order, remanded the case to the Commission for proceedings consistent with that Court's opinion. The court below held first that that 1957 Amendments to Section 209 (b) forbid consideration of the adequacy of legal service in determining whether a denial of a contract carrier application would adversely affect the supporting shippers. Well that's in the record at page 406, and however, secondly that the denial of the application would so if found adversely affect the supporting shippers as it found, and as the Court found that they required a special service which could not be supplied by existing common carriers. And finally, that Court held that the Court must consider the lower rates of a contract carrier service in evaluating the effect of a denial upon the shipper. I'll try to summarize the facts fairly. There's no real dispute over them but in places they're vague and honest man can interpret them differently. The Steele Canning Company is the principal shipper supporting the Reddish application, and one of their officers was by far the principal witness. Steele normally buys and distributes about 75% of the output of the other two shippers, also vegetable canners. Steele sells its merchandise through food brokers, to wholesalers, chain stores and the larger supermarkets. They do not sell to the corner grocery stores as suggested in the Department of Justice's brief. They're substantial canners and they sell to substantial customers. He testified that the majority of Steele's customers, roughly 80% of them, buying orders from 3,000 to 10,000 pounds per order. 3,000 pounds will represent 100 cases. We hold our minimum to a 100 case shipment. Steele's represent and testified that a number of its larger customers by 10 days supply where 10 years ago, they'd buy a truck load. That way, they can operate on the canner's money. I think that's a little bit of the ultimate economic background with some of these transportation situations. The canning business is competitive with narrow profit margins. Steele's competitors in the Arkansas Valley and nearby points use a combination of private carriage for smaller shipments plus common carriage. Steele's customers placed their orders principally by telephone and often for delivery on specified days or even specified times a day. Steele testified that we used common carrier and straight truckload shipments and on many shipments that have a destination and two intermediate stops. The supporting shipper's, Steele and the others stated that they would continue to use common carrier service on truckload shipments, even if registered application were granted. Now, there's a history to this transportation.
Speaker: (Inaudible)
Robert W. Ginnane: The supporting shippers stated that they would continue to use motor common carriers for truckload shipments, full of truckload shipments even if the Reddish application were granted.
Speaker: (Inaudible)
Robert W. Ginnane: They are in effect so they would not.
Speaker: (Inaudible)
Robert W. Ginnane: That would resort to private carriage.
Speaker: (Inaudible)
Robert W. Ginnane: Yes. The history of this transportation is something like in the Drum case last week. In 1948, Steele started to transfer its small shipments in consolidated lots, in its own vehicles, private carriage bona fide private carriage. And he continued that until 1958, when he encountered labor difficulties, which resulted in a sharp reduction in his contract and his private carriage operations. And it was at that point that on Reddish's application, the Commission authorized Reddish to perform a temporary service authorized in temporary authority to serve Steele as a contract carrier, a temporary authority which is still in effect pending the outcome of this litigation. The shippers testified that they could not use the less than truckload services of the protesting motor common carriers for various reasons. First, that although small shipments must be carried, as a matter of economics and consolidated truckloads, a common carrier often cannot carry consolidated loads because it doesn't serve all the destinations. That is of the different points, it will have to breakup the consolidated loan for interline or interchange with other carriers that do serve the destinations. Secondly, they alleged, although in somewhat general terms, that such interchange when they used more than one carrier can result in delay, increased likelihood of damage and misconsignment of shipments. And finally, they alleged that the protesting motor common carriers will handle such LTL shipments only at rates higher than truckload rates. In its report, the Commission purported to summarize the general position of the shippers as follows. This is in the record at page 390. Steele's representative expressed the opinion that it would be forced out of business, if it had to ship the numerous small orders of canned goods in less than truckload quantities at less than -- at less than truckload common carrier rates and that successful operation of its business necessitates the movement of this traffic in consolidated loads either by private carriage or in for-- hire transportation at truckload at rates. There wasn't too much specific evidence as to rates. Looking at the Reddish's brief and the citations which he gives, they refer the Court to pages in the record which show his rates to a few points in Ohio and it's cited as showing that he was performing to those points, pooled truck movement of small shipments at a cost to the shipper, at a rate comparable to the truckload rate of the motor common carriers. Also the Steele representative testified year rates addressing the cross-examiner, year rates on LTL shipments are prohibited in the most points. But later, he was asked to explain that and he said, “I mean those rates and certain occasions are two and three times as high as truckload rates,” But without further elaboration or detail. Now, the testimony of the protesting motor carriers that is set forth in detail carrier by carrier in the examiner's report which is put in the record. It was summarized in the Commission's report at pages 391 and 392 of the record as follows; by either direct or joint-line service, motor protestants can provide service to substantially all the points involved herein. Each of the opposing motor carriers, except Nelson Brothers, as a common carrier and each operates a substantial amount of equipment suitable for the transportation of the commodities here involved. Although, shippers have knowledge of the availability of service from several protestants, none of the protestants has participated in the involved traffic. All have expressed an interest in participating in this traffic either as initial or connecting carriers on both inbound and outbound shipments. They have handled both large and small shipments of the type of traffic here involved, and are willing to provide multiple pick up and delivery where authorized. So in that context, more or less undisputed facts, the Commission turned to apply the criteria in Section 209 (b), the five criteria that were referred to this morning. Looking at the number of shippers to be served by Reddish, the Commission concluded that his proposal to serve only three shippers failed within the definition of contract carrier in Section 203. Then turning to the nature of the service proposed, the second criteria, the Commission noted that the shippers require a motor carrier service for the transportation of less than truckload shipments of canned goods providing multiple pickups and deliveries. They had found protesting carriers are authorized to serve the origin points involved and either directly or through interchange, a numerous points in a vast 33-state destination territory in which applicant desires to operate. The service required by the shippers, the Commission found, does not seem to be in any way different from that which motor common carriers are rendering daily to countless other shippers of the same or similar commodities. This appears to be a situation of which the service proposed and shown that when needed could be performed by protesting common carriers as well as by the applicant. And we submit that those applicant --
Felix Frankfurter: May I interrupt Mr. Ginnane?
Robert W. Ginnane: Certainly sir.
Felix Frankfurter: If you read that statement about the common -- protesting carriers perform this kind of service, would you mind reading that again?
Robert W. Ginnane: The Commission found the service required by the shippers does not seem to be in any way different from that which motor common carriers are rendering daily to countless other shippers of the same or similar commodities.
Felix Frankfurter: In seeking all the irrelevant factors into account --
Robert W. Ginnane: Yes.
Felix Frankfurter: The geography, the same states, et cetera?
Robert W. Ginnane: Well --
Felix Frankfurter: Not that there are common carriers in New England who do this as against common carriers in the South. I don't know if there's a difference or not, but I think those were take into account.
Robert W. Ginnane: Yes, and of course one thing that they would be taken into account would be that in sharp contrast with J-T and the highly specialized articles thereabout. We are now dealing with one of the most common items of Commerce in the country, canned food. It moves in Commerce in a volume which I would say can be exceeded only by a coal, grain and perhaps automobiles. A huge volume of canned food moves in Commerce. As an example, the railroad share in 1958, under a bureau of the census study, the railroad share was estimated to be 9 million tons. Now, this commodity, canned food, whether it's transported by the applicant Reddish or by the protesting motor common carriers is going to be moved in ordinary garden variety trailers. Trailers pulled by a tractor and no special equipment is -- it doesn't have to be refrigerated or anything like that. This could be carried anything from a wheelbarrow or not. It's been carried through the years by all types of carriers. As of 1958, a bureau of the census study which is referred to in our brief, showed the railroad as of that time holding 42% of canned seasonable vegetables for higher carriers at 19% and private carriers at 36%. As of 1958, private carriage had dominated the haulers up to 250 miles but the longer haulers, the railroads tended to dominate particularly to their extreme distances with the for-hire motor carrier sector. And there's another conclusion we draw from that that by no means, all of the competitors of these supporting shippers are relying solely upon private or contract carriage, in immense number, must even be used in the relatively inflexible railroad services. In these circumstances, the Commission considered the effect of a grant upon the protesting carriers. At that point, it relied primarily upon its own prior decision, the J-T case concluding that authorization of a new carrier to transport this traffic which the protesting common carriers could efficiently handle would have an adverse affect upon it. Now, whether or not the Commission properly applied Section 209, in so concluding was argued fully in J-T. Next, the Commission considered the effect of a denial, a family applicant and the supporting shippers. And in so doing, it rejected or certainly it heavily discounted the shippers' complaints about the inadequacy of the service available from the existing common carriers, the protesting common carriers. The Commission concluded, and this is in the record at page 394 that aside from evidence pertaining to rates, the record is devoid of any substantial showing of dissatisfaction on the part of the shippers with existing service. Complaints about joint-line service, slow transit time and inability to arrange multiple pickups and deliveries are of a general nature and are substantiated by reference to specific instances. Now, although protested motor carriers, especially those operating of a regular roots maybe hindered in some instances by their authorities and the nature of their operations from achieving complete flexibility in affecting pickups and deliveries. The supporting shippers have failed to show that they have been unable to obtain reasonably adequate service upon request. The Court below at that point held the contrary. It said, and this is at page 406 in the record, the record clearly shows that the shippers have not used the services of the protesting carriers because these services are inadequate. The Court below also held and this is at page 410, that the shippers required special service which could not be supplied by a common carrier. Now the Commission erred as a matter of law in equating the reasonable service of the existing common carriers with the special service which the court found that the shippers needed. Now, leaving the question of rates aside, we submit that that rationale of the Court below presents a very serious problem for the entire common carrier industry, rail and motor alike, and that's because we're dealing here with a commodity which requires no special equipment or handling, which is one of the largest freight movements in the country. We're dealing with an application to transport it for substantial shippers to points in 33 states. We say that if the Commission must grant such a broad application or such a common commodity and on such a generalized showing, it will have to do so in similar cases because on this record, evaluating this record, it's fair to say that any shipper of canned food can make the same general criticisms of common carrier interline service on less than truck line shipments, and any such shippers could testify as Steele did that he and his customers would like fast, single line service on less than truckload shipments and at truckload rates every shipment in the country would like it.
Felix Frankfurter: Well, like it because interline -- because shipping from one carrier to another involves delay uncertainty.
Robert W. Ginnane: It often does, it often does.
Felix Frankfurter: (Voice Overlap)
Robert W. Ginnane: It often does. As a generality, one line service by a single carrier from origin to the ultimate destination is faster than interline service.
Felix Frankfurter: Well, what was the volume of the Commission, from what you have read, the Commission said that these were generalized. Now, what specifically was the evidence that the Commission rejected on the part of the shippers that this really isn't meeting their needs? I don't mean that its perfection, nothing as perfect as well I suppose. But this isn't meeting their needs and the common can't play in which one would use that phrase.
Robert W. Ginnane: Well, a bit later in his report, the Commission concluded that the shipper's real complaint was over rates not over service and that's to service.
Felix Frankfurter: But the District Court you say went on the ground that the record clearly established. That means that there wasn't room for a contrary judgment by the Commission that straight line shipment, straight line transportation is advantageous. Now, the question is that it's sufficiently advantageous as to make -- if you please the qualitative difference, I should think that's important, isn't it?
Robert W. Ginnane: I would reply this way, that in this generalized evidence and some of those at page 194 and 195 and again at 198, that the court below made an independent evaluation of that. We submit that it was sufficiently general that the Commission was not compelled to accept it as a sufficient demonstration that the service of the existing common carriers was not reasonably adequate.M
Felix Frankfurter: Like you said a minute ago yourself that no doubt that straight line transportation is preferable. Now, how heavily preferable? To what extent preferable?
Robert W. Ginnane: That would vary from case to case. It would vary for example as to whether you had to interline with a total of three carriers or whether just two. The motor carriers involved in the interchange --
Felix Frankfurter: What exactly this issue canvassed dealt with to a testimony and for experienced over a period of month if not in a year, et cetera, et cetera?
Robert W. Ginnane: It's dealt with some generalized examples at pages 194 and 195 of the record, and began at about 198, but I think (Inaudible) will indicate that the Commission was entitled to call it unsubstantiated generalities or at least not going beyond the objections which anybody will have to a less than single line service for all of their shipments.
Earl Warren: Was there a testimony contrary to this that you pointed out to us here on 195, 196 and 197?
Robert W. Ginnane: My recollection is that there was not, there was not.
Charles E. Whittaker: And Mr. Ginnane that the average stops and deliveries here was about six per trip on these LCL loads?
Robert W. Ginnane: Five or six, yes.
Charles E. Whittaker: And that the most -- that a common carrier or through line hauler could efficiently handle would be two or three?
Robert W. Ginnane: Well, the evidence on that was from Steele's representative who testified that they had used common carriers not only for truckload shipments but also for shipments which involved deliveries at two intermediate lines in addition to that destination. That was a precise testimony on that one.
Hugo L. Black: Did the carrier show inability to do more than that?
Robert W. Ginnane: For our great many of these points, there's no question, they would have to interchange with other carriers and no one of these carriers are on protesting motor common carriers, serves more than the best, a good fraction of this 33-state area and no motor common carrier of the country does. We're talking about three quarters of the United States now being covered by this application. Now, for a great many points in that 33-state area; there would have to be an interchange of at least one carrier, maybe two. It was not developed in detail but we can say that just from the size of the area involved.
Hugo L. Black: The testimony for the applicant was if they could do it directly.
Robert W. Ginnane: That they could do it directly. It wasn't too specific but obviously what they would do, they would accumulate shipments for a series of points more or less approximately in the line and they then carry them through and drop them off as they went. And then of course, they would -- because of course they couldn't take a one time shipment by itself in Arkansas, the New Jersey City and they don't pretend to. Now in the long run, economic forces, not the Interstate Commerce Commission and not the Congress, are going to determine whether this huge chunk of traffic is going to be carried primarily by railroads or motor carriers or private carriers or contract carriers. But in the meantime, I don't think the Commission has to accelerate that, if that is the trend. I don't think it has to accept a shipper's statement at face value that if he doesn't get a contract carrier service, he's going to grant for private carriage and perhaps he will and perhaps he won't. The case was before this Court two years ago, the General Motors Corporation was stating that well they might go into private carriage, well they did. And this Court properly reminded the Commission that it shouldn't rely too heavily on the trucks or shippers as to what they would do if they didn't have their way. And as the Drum case last week, and as Mr. Steele's experience in this case shows, it's one thing to talk about private carriage but it isn't always a bed of roses. And under those circumstances –-
Felix Frankfurter: Well, is it if we take into account anything that promotes private carriage is to be discouraged? Is that also National Transportation Policy?
Robert W. Ginnane: Not to be discouraged in any affirmative sense because the Interstate Commerce Act leaves every shipper free carry his own goods. But conversely, the whole National Transportation Policy is to encourage the development of a system of public transportation which can serve all of the shippers reasonably and economically. And in this context -- sir --
Charles E. Whittaker: I would like to understand that here the Commission approved the findings of the examiner but did not follow his conclusion?
Robert W. Ginnane: They approved his findings except as they otherwise indicated in their own report which they often do.
Charles E. Whittaker: And --
Robert W. Ginnane: May I give you an example of that?
Charles E. Whittaker: Yes.
Robert W. Ginnane: He had the pages of detailed findings as to the statement especially testimony of the protesting common carriers. The Commission didn't reject that. It adopted it. In its own report, it simply summarizes its purposes in one paragraph.
Charles E. Whittaker: Did he find -- the examiner's found that there were special conditions relative to the delivery of these canned goods that these various shippers had rules where they must receive from a particular time for example?
Robert W. Ginnane: Yes, I refer to that in the statement I think that some -- Steele's representatives testified that some of his customers, he did not say how many, but presumably quite a few required deliveries on certain days and that some would require shipments at specified times a day. I suppose do you know to tie in with the availability of the shipper's own work forces. I think that would be rather common in the --
Felix Frankfurter: Did the common carriers meet that requirement?
Robert W. Ginnane: I suppose to some extent, they have to.
Felix Frankfurter: But I don't mean --
Robert W. Ginnane: I mean many shippers --
Felix Frankfurter: I don't need to go in your general knowledge Mr. Ginnane. I mean, is this canvassed in this – I thought we are reviewing a proceeding which --
Robert W. Ginnane: Not in --
Felix Frankfurter: (Voice Overlap)
Robert W. Ginnane: -- not in that kind of detail Your Honor.
Charles E. Whittaker: Well, didn't the Commission -- didn't the examiner find that the common carrier service couldn't meet that kind of special condition and that it could be not only by a contract carrier --
Robert W. Ginnane: That was his conclusion.
Charles E. Whittaker: The Commission -- the examiner's conclusion.
Robert W. Ginnane: The examiner's conclusion.
Charles E. Whittaker: Yes. You call it conclusion, I referred to it as a finding, I don't not know which it is
Robert W. Ginnane: Certainly. And the Commission refused to give weight to what it regards as such a generalized objection as to common carrier service.
Hugo L. Black: He refused to give weight or refused -- it set aside what he had found. It refused to give weight to the fact or it just said that that's not a fact.
Robert W. Ginnane: No, it in affect said, that these complaints are not sufficiently substantial, and in fact, it discounted them as being the sort of complaint that anybody could make against interline service.
Hugo L. Black: That would be a complaint that anybody would make because it's so plainly obvious that this thing would be advantageous or disadvantageous that anybody would do it. Did they set aside these factual findings on or did they just discount it and then say, “Well, even so, we won't -- they're not patiently waiting.” There's quite a difference to that.
Robert W. Ginnane: Well, I don't think they set aside. They took his findings based -- which in turn were based upon rather generalized evidence. And the Commission --
Hugo L. Black: Suppose they would, if they set them aside because they were based on turn --
Robert W. Ginnane: I would say rather the Commission was evaluating that generalized evidence itself and stated that, “We do not think these objections are enough for us to hold that the services which could be provided by the existing common carriers would not be reasonably adequate.”
Hugo L. Black: Now, if it rejected those finding, where did it rejected into the Court --
Robert W. Ginnane: It did not in terms reject those findings rather it itself characterized the limited evidence.
Hugo L. Black: Did it make different findings?
Robert W. Ginnane: In substance, yes.
Hugo L. Black: Where was that?
Robert W. Ginnane: On Page 394 Your Honor, in the second full paragraph about this sixth line, eight line. The Commission concludes, aside from evidence pertaining to rates, the record is devoid of any substantial showing of dissatisfaction on the part of the shippers with existing service and it goes on to characterize or rather sparse testimony on this point. It says, “Complaints about joint-line service” slow trends of time and inability to arrange the multiple pickups and deliveries are of a general nature.
Felix Frankfurter: You refer to Page 198 and I looked at it, anyhow, it's on Steele, this past month, when that merchandize of interline especially get shifted from one carrier to another. We have one awful time getting their merchandize at large. This past month, we -- I've had complaint, we had one customer (Inaudible) ship is ordering a full load, shipped it in our trucks so it wouldn't be necessary. But I should think withheld in the Universal Camera case that the Commission, therefore it was your Commission, administrative agency must not disregard the examiner's finding. It must consider it as part of the whole record but it may -- or different conclusions from what he has before him.
Robert W. Ginnane: I don't think they reverse the examiner on any finding as to what the facts were. Mr --
Felix Frankfurter: Mr. Ginnane, do you think -- can you give me any hope that I might live long enough so that the Commission would make (Inaudible) on findings so that (Inaudible) have to go through looking for the (Inaudible) I just asked you if you could give any hope along that line.
Robert W. Ginnane: Oh I think that perhaps presumptions on my part. But I think what the Commission has done in its report. I think it's a quite permissible technique. It has taken, for example that -- the undisputed but general testimony of Pooles (ph) representative and it just put its own characterization on it as not being sufficiently substantial in character to preclude the Commission from finding that the existing services -- existing carriers could perform a reasonable adequate service on this commodity canned food.
Hugo L. Black: You're on the -- do you consider that 203 (a) statement with reference to the contract carrier, that furnishing of transportation services designed to meet the distinct need of each individual customer must to be passed on in each one?
Robert W. Ginnane: I don't know how to answer that except by getting into almost a semantic circle.
Hugo L. Black: Of what?
Robert W. Ginnane: Semantic circle. It seems --
Hugo L. Black: Oh I'm not talking about systematic itself for the furnishing of transportation services designed to meet the distinct need of each individual customer. Now, is there any finding here of any kind by the Commission which rejects the idea that this individual customer would not be greatly benefited by this service?
Robert W. Ginnane: Oh no, no indeed there was not.
Hugo L. Black: If it's conceded that he would be -- I'm not saying that's to control.
Robert W. Ginnane: I think the Commission's report assumes that the kind of service which Reddish could perform and assuming what the record does sound that he could financially do so, that the service proposed by Reddish would be beneficial to the shipper because what was offered --
Hugo L. Black: Would be designed to meet his special needs.
Robert W. Ginnane: Certainly, from the shipper's point of view, it would be the perfect service. It would be the ideal that the single line shipment, single line transportation of less than truckload shipments at truckload rates. Every shipment the country would like it.
Hugo L. Black: Suppose it's not less than truckload rates. It would be -- is there any doubt that there would be a distinct advantage to shippers who can get it to have a contract carrier who would give them less than truckload service?
Robert W. Ginnane: Alright, I think the report assumes that the shipper would be benefited. But the report goes on -- but if under that rationale of the court below then the result would be to transfer from the Interstate Commerce Commission to the shippers to determine whether and when contract carriage is consistent to the public interest of the National Transportation Policy, and it could mean in a situation like this with this important commodity, that you turnover to the food canners of America. The choice as to whether the --
Hugo L. Black: I'm not talking about the food canner. Maybe -- I'm not sure about what this means. That's the reason I'm asking you the question. Maybe it means that Congress decided that's what I want you to say one way -- or discuss one way or the other if you will. Congress decided that contract carriers should be given through him. That could be shown in reference to a particular need that could be carried out which was sufficiently enumerated to justify our contract carrier and forming the service if it was a distinct need it had.
Robert W. Ginnane: My reply is that Congress did not intend that in view of overall broad objectives, the National Transportation Policy to maintain a balanced, efficient system available to all the shippers not just to those who are able to get contract carriers for themselves.
Hugo L. Black: What about a distinct type would -- could you say it would refer to a type?
Robert W. Ginnane: Mr. Justice Black, would you forgive me if I say that I feel honor bound to heal the rest of the time to Mr. Rice.
Hugo L. Black: You could have answered --
Robert W. Ginnane: I'm sorry --
Hugo L. Black: -- what I've asked you. I just -- I'm not sure about this. I was asking --
Felix Frankfurter: It might be contended that Congress meant almost the opposite that it didn't say that a permit must be granted to a contract carrier whenever it would be to the advantage of a shipper to use the contract carrier. That is not the legislation, isn't it?
Robert W. Ginnane: It's hardly the result. We would have expected to come from legislation which was clearly intended to tighten up on what Congress thought was an excessive growth of contract carriage. Thank you.
Speaker: (Inaudible)
Robert W. Ginnane: I hope so. I no longer have the time to do it sir.
Speaker: (Inaudible)
Earl Warren: Perhaps Mr. Rice will address himself to the lower rates question.
Roland Rice: I hope to have some time, Mr. Chief Justice --
Earl Warren: Well, we've got time now, haven't we?
Roland Rice: We're coming right to the question of lower rates and I also want to deal with the other question, which has just been discussed. It is said by the court below Your Honors that the Commission erred in not giving consideration to rate advantages and that this ought to have been done and that as I understand it, the court below believes that this alone should have been determined in this case. First of all, the Commission has taken the position that rates ought not to be considered in these application cases. I think the real reason for that is not so much that rates would then involve cost -- studies of costs which are extremely lengthy and expensive and time consuming. It isn't that alone though that would be very hurtful and delaying in these proceedings. Furthermore, to do it at this stage, it would probably mean that all the protesting carriers would have to bring in studies of their rates and cost studies which would further delay and complicate the matter. I am inclined to think that a better reason for refusing to consider rate levels in the application proceedings is that the sole legal question before the regulatory agency at that time is a question of the service need, is there a need for service? Not what the service is where but whether or not a need exists and to pass upon the various considerations which go to make up that need and to arrive at an administrative determination upon those facts as to a need. The Commission has very properly said that if there is a question concerning the level of the rates that there are other provisions in the act -- the provisions that we call the rate provisions that are available to the parties for filing complaints and sometimes they are petitions for investigations and so on, whereby the level of the rate maybe brought before the Commission in a proper proceeding calculated to consider that issue and not the issue of a need for additional service or new service or advancing or extending service.
Hugo L. Black: May I ask you -- if I understand correctly to say that the question of rates can never be considered in this kind of --
Roland Rice: In an application proceeding? No sir, I do not say that they can never be considered.
Hugo L. Black: I had in mind suppose there is a particular of type of service inherently so much easier performed that your knowledge rate would be less but you're not asking for fixing of the rates, would that not be a permissible element of consideration in determining --
Roland Rice: That might be but we do not have that here, Your Honor. And furthermore, I think in the Schaffer case, this Court had such a matter before it or so indicated and furthermore, the Commission has recognized that if the level of the rate is such as to constitute effectively and embargo, perhaps rates ought to be considered then but we don't have that before us at this time.
Felix Frankfurter: Are you saying that if in an application proceeding, the shipper must submit to a denial of the application and take on the common carrier and then bring a proceeding and say the common carrier to which you have preferably -- which I must now use unless I become a private carrier, as to why unreasonable rates and they have to begin rate -- unreasonable rate proceedings?
Roland Rice: If I understand your question, you're assuming that he would two things that he would support an application for new rights and also would file a complaint.
Felix Frankfurter: But he would -- that he would -- a shipper would support this application but the Commission says, “No you can't have this more favorable mode of transportation, this contract carrier. You have to resort to a common carrier” and then he must bring a proceeding and pay the rates to which I'm subjected because I must use the common carrier if I don't want to go into the private carriage business too high and that will bring a regular rate proceeding to lower the rate, is that it?
Roland Rice: No, I'm not saying that he should go through both of those, I'm saying that --
Felix Frankfurter: Perhaps if the rates are onerous.
Roland Rice: Well, he wouldn't' have to try first of those. If the rates are onerous and he doesn't like them, he can file the complaint against the rates but it's not --
Felix Frankfurter: That's what I'm talking about. He must file -- he loses, the shipper loses in the application proceeding to get a more favorable private contract carrier as a mode of transportation. He loses in that, and must therefore either do his own carriage or take the common carrier who has or which has onerous unreasonable rates, he must begin all over again in a rate proceeding, is that right?
Roland Rice: You said if he loses.
Felix Frankfurter: Well, I'm assuming he lost --
Roland Rice: Yes, yes, that would be the procedure to be followed. But of course, you've got this fact in this particular case, that they had not used this common carrier as a great deal and there's no evidence here at all that they had made any complaint about the rates and no evidence --
Felix Frankfurter: I'm assuming it's established. Is it established that the contract carrier rate would be cheaper? Is that the --
Roland Rice: Not established.
Felix Frankfurter: Pardon me?
Roland Rice: Not established.
Felix Frankfurter: Do you accept that or do you reject that?
Roland Rice: I reject that personally.
Felix Frankfurter: Then we're talking about a hypothetical case, are we?
Roland Rice: In the question you put, that's my understanding, yes.
Felix Frankfurter: I mean the case before us, isn't the case where concededly the contract carrier's rate would be less than the common carrier's rate.
Roland Rice: Only in a few instances, and that's all that it says Your Honor.
Hugo L. Black: Are you rejecting Mr. Ginnane's argument, which I understand the basis and part on the fact that what they were really trying to get here was cheaper rates?
Roland Rice: No, I'm accepting that fact, and the Commission so found. The Commission after looking at all of this evidence came to the conclusion that all the -- all the facts considered, all the elements of the law that the Commission had to look at, that the one important complaint these shippers had related to the level of the rates.
Speaker: Where are you at?
Roland Rice: At 395 of the record as I recall it, Your Honor.
Hugo L. Black: May I ask you one question on that because of the point -- I was trying to ask, suppose that was the only point?
Roland Rice: Suppose that was --
Hugo L. Black: That was the only point they had but they wanted to say and prove that was so much cheaper to the carrier by this method that inherently they could do it a lot cheaper and they want to get the advantage of it. Would you say they abide from doing that in this kind of proceedings and that would have no influence?
Roland Rice: I don't think that that would have any influence, but the only case that I know anything about in which that has occurred is in the Schaffer case where you had two modes of transportation, and this Court took a look at the modes of transportation and found that an inherent advantage in one mode lay in its ability to provide better service and at lower rates.
Hugo L. Black: Well, they have two types here, less than -- less than truckload and truckload.
Roland Rice: That's right, and they had used --
Hugo L. Black: Would you say that if it's to be admitted beyond all doubt much cheaper the carrier by less-than-truckload, they made a contract to somebody to carry by less-than-truckload then common carrier one takes them before they could make that contract, that they would be barred from making that contract because the advantage -- the cheap advantage they would get, or the only advantage they would get would be cheaper rates?
Roland Rice: No, and it just doesn't operate that way. Let me say this, Your Honor. You have a truckload situation in which for example 30,000 pounds of canned goods would be carried on a vehicle from A to B, from one consignor to the one consignee. There is no complaint at all about those rates. Insofar as these facts are concerned, we don't have any problem there. But if you carry say, 5,000 pounds, all from the same consignor to one consignee at A and then 5,000 pounds to another consignee at B and another 5,000 or 7,000 pounds to another consignee C, this man, Reddish, had a stop-off charge which he imposed presumably but was not charging. The common carriers were wanting to impose their charges. They would provide that kind of service. They had the stop-off charge for that. And the imposition that is an application of that charge did lead to a greater cost to the shipper. And they had never been approached to see whether or not the level of that total charge to the shipper could be changed to make it acceptable to the shipper. In other words, the carrier is right (Voice Overlap)
Hugo L. Black: Could they approach the shipper to tell him that we are in modern business and we won't get this business (Voice Overlap) cheaper?
Roland Rice: There is some evidence of solicitation of traffic.
Hugo L. Black: To get it at a lower rate?
Roland Rice: I don't think there's any evidence that they had offered to decrease their rates.
Hugo L. Black: Did they offer to the Commission to lower that rate or ask the Commission?
Roland Rice: No. No, there is no evidence of that, Your Honor. I simply would like to call attention again to the Schaffer case, and to read this one sentence. In these circumstances, as this Court said that is, where you have motor and rail carriers involved, and not just one mode. In these circumstances, a rate benefit attributable to differences between the two modes of transportation is an inherent advantage of the competing type of carrier and cannot be ignored by the Commission. Let me go ahead and say that --
Felix Frankfurter: What does that mean cannot be ignored by the Commission?
Roland Rice: I'm quoting that --
Felix Frankfurter: I'm asking -- yes you were, but I don't quite get its pertinence to this thing.
Roland Rice: Well, the Commission, I was really talking about whether or not there are any instances in which the Commission should look at rates and I said that the Court in the Schaffer case had done it and I was reading the language there in which this Court as I understood it had said that it is proper for the Commission to look at the -- at rates where different modes of transportation are involved.
Felix Frankfurter: What you are saying the essential thing is that considering the nature of the problem and the structure of the Act, rate problems was not to be dealt with in certification proceedings or other proceedings had nothing intrinsically to do with rates. Is that what you're saying?
Roland Rice: Precisely that.
Hugo L. Black: Are you are saying rates, consider the rates will not be -- ever be considered --
Roland Rice: No.
Hugo L. Black: -- or that rates will never be fixed in the proceeding of this term?
Roland Rice: Never be what?
Hugo L. Black: Fixed, changed, rates will not be changed.
Roland Rice: Well, they won't be --
Hugo L. Black: And do I understand you to say in answer to Mr. Justice Frankfurter --
Roland Rice: No they wouldn't --
Hugo L. Black: -- in a proceeding of this kind with rates, they have nothing to do with it at all, even though that might be one of the main reasons why you want different kind of service, contract service that could be done cheaper?
Roland Rice: I'm saying that rates do not properly belong in a service case when somebody needs a new service. Let's assume a man --
Hugo L. Black: I agree with its rates. You don't fix the rates of the new service.
Roland Rice: Not only --
Hugo L. Black: I have no doubt about that but are you going far enough to say that they don't have anything to do with it under the circumstances?
Roland Rice: I mentioned two instances in which I know that they may lawfully be done. One, what this Court said in the Schaffer case, and two, where there is an in effect a rate so high as to constitute an embargo. I recognized those two and others, I don't know about.
Felix Frankfurter: Well, specifically in this case, the Commission while denying this grant has given a temporary certificate, hasn't it? It was a temporary certificate, I understand.
Roland Rice: There is temporary requirement.
Felix Frankfurter: Therefore the Commission may say, taking into account the five ingredients of 209 nevertheless, there is raise of questions of the reasonableness of the rate of these common carriers which has been disclosed in these proceedings, we will continue this temporary certificate and revert the question of the rate structure of the common carrier to a separate rate hearing.
Roland Rice: That's precisely the way it would be done.
Hugo L. Black: I agree with that.
Roland Rice: There is just one more thing that I'd like to say about these rates and the reason why they should not be considered in a proceeding having to do with operating rights and that is that if the Commission were required to do this, anybody could come up to the Commission and offer a lower rate than the published rate and if the Commission is required to grant the authority sought simply because the lower rate is proper, we would invite the most predatory practices that both the Congress and this Court through the years had condemned.
Hugo L. Black: Or wouldn't the opposite be the case, if the Commission would look and say, “We would not consider the cheapness of these rates at all under any circumstances in deciding this question. Wouldn't that -- wouldn't be the predatory practice?
Roland Rice: I don't think it would in an application case (Voice Overlap)
Hugo L. Black: It would be a predatory of a different one.
Roland Rice: I don't think it would at all because you still have the opportunity to examine the rates under a rate proceeding.
Earl Warren: But would the fact that the common carrier rates were not unreasonable prove that the private carrier or contract carrier could not reasonably do it cheaper and therefore better supply the needs of the shipper.
Roland Rice: On identical service Your Honor which is really what you would have in this instance as I see it, I have no reason to believe that a contract carrier can perform the service any cheaper than the common carrier.
Earl Warren: But I understood here -- but I understood from Mr. Ginnane that it wasn't identical service that these men could distribute to six, seven or eight more people on its trip but that a common carrier couldn't do more than two or at the utmost three. Now that's quite a -- there's quite a difference.
Roland Rice: Well, that all depends on the operating authority of the respective carriers. The common carrier can do it just as well as the contract carrier, if he has authority to reach those points. What Mr. Ginnane was saying as I understand it is that here you have a man in one state, seeking authority to serve every point, that would be thousands of points in 33 states in the United States and no one motor carrier has the authority to do that and that's why they can't reach all of these points and make all of these multiple deliveries. They could make some in many instances but in some cases, their operating authority didn't go that far.
Earl Warren: But he said there was a substantial difference and undoubtedly that that would result in the benefit to the shipper.
Roland Rice: There would be some benefit. I think the Commission realized that, but at about 394, as I recall it in the record here, the Commission weighed all that and came up finally with the conclusion that the act and the policy made it come to the conclusion that the authority should not be granted. And one of the reasons I think for that is that unless that was so, unless there was some restrictions upon the entry, the right of entry into regulated transportation, we probably have multiple thousands of carriers and I'm not at all sure that that is in line with the transportation policy expressed with the Congress. Every little shipper all over the United States would be wanting a carrier to serve all of his consignees throughout all of 48 states or 50 or such of them as those to which he sent his goods. And I think the Congress has looked at that and decided that that is not a good way to establish a national transportation system. You've got to have some single line and some interline in order to have a sound economic transportation system to serve all the needs of all the people and it cannot be perfect in either situation. Thank you.
Earl Warren: Mr. Solomon.
Richard A. Solomon: Mr. Chief Justice, members of the Court. I don't agree for a minute that the only question here was cost and maybe I'll have time to get back to the other factors but I think they've been fairly well canvassed already. But let me direct myself immediately to the cost problem which is a serious one and a recurring one and this is merely an example of a Commission decision in which they say we won't consider cost. Now, let's see what we're talking about and let's us look at what the claim was and what the Commission did. You look at page 388 of the record. The Commission in its decision says what the contract carrier applicant claim and after the -- about halfway down that long paragraph, three or four lines after the reference to the Schaffer case, you will see that they're discussing the claim made by the contract carrier and he said that in determining an application for contract carrier authority, we, the Commission, must consider whatever distinct advantages contract carrier service may have overcome in carrier service including the possible ability of a contract carrier to offer service at lower rates. That's the claim. How does the Commission respond to this claim? Look at page 395. This is how they respond to the claim. The only serious complaint which shippers have against existing service, I'm reading from the final paragraph on that page, is with the less than truck load rates of motor common carriers. I don't think that's true, but that's what the Commission says. Even should the application be granted, they assert, they will continue to use common carrier service to some extent. That's true, but irrelevant. That is with respect to the car loan service not the less than car loan service, then they go on and say, “It may clearly be concluded, we believe, that the support of the application rests entirely on a desire to obtain lower rates” and their answer, “This is not a sufficient basis to justify a grant of authority to a new carrier.” Let me go on to say as Mr. Rice does that the solution is to handle this matter in a rate proceeding.
Potter Stewart: Mr. Solomon would you disagree if the Commission had said and added one word and it said, “This alone is not a sufficient basis to justify grant of authority to a new carrier?”
Richard A. Solomon: I don't quite know what that would mean. How that word alone change the situation?
Potter Stewart: Well, exactly. If the Commission was factually correct and would usually disagree that the only --
Richard A. Solomon: Yes, I understand the question.
Potter Stewart: -- the only advantage on here was a possibility of lower rates. Would you agree that as against maybe --
Richard A. Solomon: I understand your question.
Potter Stewart: (Voice Overlap) on the other statutory criteria, would you have agreed to the Commission that if they have said this alone is not justification?
Richard A. Solomon: I would not agree with them. Particularly in the case here where --
Potter Stewart: I thought it was your position that nothing alone is necessarily justification for any projection or --
Richard A. Solomon: Nothing alone is justification for anything. You have to just look at the whole facts.
Potter Stewart: All the statutory criteria.
Richard A. Solomon: And that is particularly true in this case where the Commission accepts the examiner's findings and in fact makes themselves that these shippers are going to go back to private carriage. They accept those findings and yet by applying this presumptions, which I discussed I'm afraid too long this morning, they say nevertheless -- although the shippers are going to go back to private carriage, nevertheless the protestants are going to be injured. Now, certainly in the light of that type of thing, even if this was the only factor, it would be an important factor. It isn't the only factor, but even if it was, it would be.
Felix Frankfurter: Mr. Solomon, what is the legal significance of a threat of going back to private carriage?
Richard A. Solomon: The legal significance of a threat of going back to private carriage --
Felix Frankfurter: Going through it if not (Voice Overlap)
Richard A. Solomon: Yes. I'm picking up your word threat. I don't think there is much legal significance of a threat. I think a threat can be analyzed against the facts of what's going on. They could have looked to see whether -- what other shippers were doing in this area. It turns out, however, when you look to see what other shippers are doing in this area that the other shippers in this area are engaged in private carriage for their-less-than truckload goods. They could have looked to see whether he --
Felix Frankfurter: And so what? I want to know and so what, you said particularly if as the record shows in this case, this could be in the belief they go back -- they back go back to private carriage. Suppose they do, what other -- why is that -- I want to --
Richard A. Solomon: But that is --
Felix Frankfurter: I just don't understand it.
Richard A. Solomon: -- that is important.
Felix Frankfurter: I want to know what is the legal relevance of that --
Richard A. Solomon: The legal relevance of that is sir, that if that is true, the common carrier protestants cannot be hurt because they're not going to get this business anyway and the legal relevance of that is that Mr. Justice Stewart asked me if cost were the only factor.
Felix Frankfurter: Well that -- is that genuinely (Inaudible) to say they won't be hurt. There maybe a difference between having a contract carrier as a competitor and having Boeing and Swift and Schaffer and well who not do their own trucking. I don't think those are equations. Contract carriers are in business for money and a fellow who carries his own stuff, a private carrier isn't in business for trucking, he is in his business.
Richard A. Solomon: The question is the effect upon the common carrier.
Felix Frankfurter: Well, that's all speculated. We have (Voice Overlap)
Richard A. Solomon: The Commission doesn't say speculative. The Commission says that -- the Commission accepts and makes findings that there will be no real damage to them. The only damage the Commission finds is this presumption.
Felix Frankfurter: This is about the money. Isn't it about the money?
Richard A. Solomon: Well in large part. Let me get back to the question.
Felix Frankfurter: (Voice Overlap) in what part is this money? This is a question of drawing upon the available transportation resources, revenues of the country is that this is about?
Richard A. Solomon: Much more than money as Mr. Ginnane --
Felix Frankfurter: Well, this is about additional things from the point of view of the United States and the Government, but as between the protesting carrier and the private -- and the common carrier, its money.
Richard A. Solomon: Sure, sure.
Felix Frankfurter: Alright.
Richard A. Solomon: yes.
Felix Frankfurter: I'm not saying this in an invidious sense.
Richard A. Solomon: Yes, I agree completely, yes. But the cost problem, the Commission has taken a ball statement that it won't consider cost factors and it won't consider them in the context that was made which I read you and which is more expanded up in their actual pleadings before the Commission of an alleged inherent efficiency. We have exactly the same Commission determination here that this Court dealt with in the Schaffer cas e.The only problem, real problem is whether this is different from the Schaffer case because of the fact that Schaffer or maybe Schaffer happened to deal with the competition between motor carriers who were the applicants there and railroads who where the protestants, whereas this case deals with conflict between two types of motor carriage. That's the whole question as far as we can see. That there's no distinction between those distinctions I have made, Schaffer is clearly applicable here. Now, we don't think that there's any distinction. We don't even think this Court need -- get to the problem which is discussed in some of the briefs under which the lower court didn't feel that had to get to. The verbal problem as to whether contract carriage by motor transport is a different mode of operation than contract carriage by motor transport. I don't know the answer to that. There's no definition of the word mode and you'd been in a verbal more asked. But we don't think that that's necessary anyway because the National Transportation Policy which is involved here and which is what this Court in Schaffer said the Commission had to apply and was incorrectly not applying when it made exactly the same statement about rates. Isn't limited to inherent advantages of different modes. On the contrary as the court below correctly pointed out, one of the major important factors of the National Transportation Policy is to promote safe, adequate, economical and efficient service among the several carriers. And we haven't got the slightest doubt that within the context of that language, if a type, I won't use the word mode, if I type a motor carriage is capable of providing cheaper service that that is something that the Commission must consider. If there was any doubt about this. If there was any doubt about this, we think it's eliminated by the Amendment to Section 209 (b) because three months before Schaffer, Congress put in to the Act an expressed requirement of the Commission in passing upon these contract carrier applications, consider the effect of a denial upon the shippers. Now, it didn't say consider only effects of the denial upon the shipper's except whether the cost factors here are significant to them. It said, consider the effect of a denial upon the shippers, and we take that to mean what it says. Whatever the effects maybe, they should be considered. Now, consideration, one of the difficulties in this whole business is that some of our friends on the appellant side seemed to equate with the word consideration with the word decision. Of course, the Commission has broad discretion after it gives full weight to whatever cost factors are involved, to point that they are outweighed by other factors. And particularly, I'd be the first to agree that if there's any serious threat to the common carriers in an area which is necessary that might often outweigh this thing. But the problem here is the Commission never stops to consider it and we think it's perfectly clear that the cost problems must be considered. Let me say a word, however, about something that Mr. Rice said which Justice Frankfurter picked up, and that is the efficacy of a rate proceeding to settle this type of problem. And I think Justice Frankfurter is quite right, presumably the Commission could maintain this temporary authority while it went through a rate proceeding. It would be one of longest temporary authorities of all time since this rate proceeding would be from five points, from four points to 35 or 40 points throughout the country involved in many carriers, but it could do that. But I think Mr. Justice Frankfurter that the main answer to this rate proceeding as a way out of this problem, is that it doesn't settle anything. It is quite possible, quite probable I would say that what is a reasonable rate for a common carrier in the view of its other responsibilities to the public, is still a much higher rate than a contract carrier can provide. And therefore, after you get through with your rate proceeding, you are -- with all likelihood will still have an inherent advantage which it has to be considered.
Felix Frankfurter: But the rate, the rate -- question of the rate problem, with the rate claim may evaporate after the application proceeding is finished.
Richard A. Solomon: Well I agree.
Felix Frankfurter: Rate proceedings evaporate very often. These are counted in the game.
Richard A. Solomon: I agree that the problem here really isn't rates. The problem here really is inherent cost advantages. This isn't a rate problem that has to be worked out to decimal points by accounting techniques. The problem is -- the problem of administrative agency such as the CAB in cases we mentioned in our brief, handle all the time looking at a problem in its logical sense and saying is there something inherently important here which should be considered and there obviously is and they should give it some reasonable way instead of --
Felix Frankfurter: When this Court rejects an argument, it doesn't mean it hasn't considered it.
Richard A. Solomon: But when this Court rejects an argument which it has considered, it doesn't say it hasn't considered and that's what the Commission has said.
Felix Frankfurter: No, it simply says that that is an insufficient answer. That's all they said and the question that Justice Stewart put is an inflicted argument. The answer is implicit that means this alone is isn't because there are other considerations.
Richard A. Solomon: There's no -- there's no area for ambiguity Justice Frankfurter. The Commission's brief makes perfectly clear that if this Court accepts the statement here, they're going to continue until the Court tells them not to, to ignore any rate factor, that's their position and that's what they're going to do. Now, very, very briefly, let me get to the problem, the non-rate factors here. I think this has mostly been canvassed in the colloquy between Mr. Ginnane and the Chief Justice and it's perfectly clear as Mr. Ginnane frankly admitted that a single carrier devoting himself to these shippers who can serve all of their points that they originate from and go to all of the points that they're going to, can get there faster than the common carriers. Not one of them, not one common carrier protested in this record can serve even the four originating points, to say nothing of serving all the points where particular loads have to go to. It doesn't mean anything to say that canned goods is a typical product carried by railroad common carriers and motor common carriers, of courses it is. But although, canned good require as far as the makeup of the truck, that ordinary truck, the particular problem that we're dealing with here is the problem of a shipper of canned goods who has -- certainly enough adequacy into this record, a need for shipping at short notice, small orders to a number of shippers and it cannot be done by the complicated interlining consolidation drop off techniques that the common carriers because of their limitations of authority after hand.
Hugo L. Black: Why? Would you mind spelling it out in the language that the layman could understand it?
Richard A. Solomon: The record makes --
Hugo L. Black: I'm trying to see what is the real difference of these two carriers?
Richard A. Solomon: The difference is this. Supposing you have a -- we're talking about small shipments. There are 300,000 pounds --
Hugo L. Black: We're talking about the shipment of the contract carrier here as it's contrasted with the common carrier which nobody explained fully to me as (Voice Overlap)
Richard A. Solomon: The contract carrier can pick up three smaller shipments from the Steele plant in Springdale and go on to the warehouse in Westville, Oklahoma and pick up three more and then take them directly, in the same truck without any interchange or anything like that to five or six points in different states on his way out. The common carriers in the first place if there is a -- there's no common carrier who can pick up from all of these four places. They just don't have the authority to do so. There are many --
Hugo L. Black: Do you mean no one?
Richard A. Solomon: No one. One can pick up from one place and another can pick up from another place and they can get together to the third place and move it from one place on one truck to another place on another truck, but obviously that takes time. That's not the way you get an efficient split minute transportation system. Similarly, as they go along even if we -- even if the particular shipments could all be picked up by one common carrier at the originating point, the record makes clear there are a lot of these shipments which are not going to where that common carrier can drop off beyond his area of his limited license. Therefore, for those shipments, he can drop off somewhere along the line then he has to transfer to another truck. The result, the record indicates its damages in this transporting from one thing to another, delays, the type -- they just can't -- they can do it, but they just can't do it as fast and efficiently.
Hugo L. Black: I gather from what you say that this is only -- these shippers get to some extent, the advantage they get by carrying their own and deciding when they leave and where they go and have the delivery
Richard A. Solomon: Exactly. Exactly that's what contact carrier service --
Hugo L. Black: Instead of planning to go through -– except the regular schedules and the stops of the different companies would deliver it through online (Inaudible).
Richard A. Solomon: Exactly, exactly and this is agreed to by the Commission. The Commission itself admits on page 394 that although protestant carriers especially those operating over regular loads, they don't quite admit it, they almost admit it that they may be hindered in some instances by their authorities and the nature of their operation from achieving complete flexibility, the Commission admits this and Mr. Ginnane was perfectly candid about it.
Hugo L. Black: Do you know what was behind the legislative policy to permit a contract carrier, a special contract as well as common carrier?
Richard A. Solomon: Permit them to do what?
Hugo L. Black: To permit contract carrier, have a system of carriers, which would include some instances, the right -- for the shipper to make this contract for the carriers, other instances have a common carrier, what's the premise behind --
Richard A. Solomon: The original premise --
Hugo L. Black: -- a policy for having a contract carrier at all?
Richard A. Solomon: The premise was that they were there by the time Congress got around to regulating motor carriage in 1934 or 1935, there were three types of carriers. There was private carriage, there was common carriage and there was this third type of carriage where individuals engaged in the transportation business were transporting not as common carriers, but as contract carriers and the Commission felt that if it -- the Congress felt they have to regulate this existing type of service.
Hugo L. Black: Did it regulate all the three? Did it regulate number one, the private carrier?
Richard A. Solomon: Only to a very limited degree.
Hugo L. Black: Did it regulate number two the contract carrier?
Richard A. Solomon: Yes sir.
Hugo L. Black: To the same extent that did the common carrier?
Richard A. Solomon: Not in our opinion, but that's the argument I made in the first argument. That's the difference in the language between 207 and 209 as example -- as enlarged upon in the --
Hugo L. Black: There was no inclination on the part of the Congress, I don't recall. I don't recall the history. But was there's any indication on the part of the Congress, they want to make it harder for a company to transfer its goods to a common -- to contract carrier than to its own employee?
Richard A. Solomon: I don't think so sir. I think the answer is no, but I do want in fairness say, it's perfectly clear that Congress was regulating contract carriage among other things, one of his primary reasons in regulating contract carriage was to prevent an undo burden upon common carriage by a overlooking (Voice Overlap)
Hugo L. Black: Overlooking through that area.
Richard A. Solomon: That's right.
Felix Frankfurter: But Mr. Solomon, when the Congress dealt with the contract carrier, it wasn't indulging in permission. It was restricting the area of freedom.
Richard A. Solomon: When Congress passed the 1935 Motor Carrier Act it was imposing restrictions on both common and contract carriers.
Felix Frankfurter: There were always more restrictions in common carrier.
Richard A. Solomon: No sir not until 1935.
Felix Frankfurter: I didn't say that there was a Congressional Act permitted with them. I say there were always restrictions on common carriers and there were no restrictions on contract carriers, and Congress by 1935 wasn't giving permission for largest contract carriers. It was imposing very severe restrictions, is that right?
Richard A. Solomon: It was imposing restrictions.
Felix Frankfurter: Well anyhow, they had -- they had freedom in law both under the state and federal law which thereafter did not have.
Richard A. Solomon: Well, I don't want to get -- their state law is more complicated than that. They --
Richard A. Solomon: Mr. Chief Justice, if the Court please, I represented Mr. Reddish below and the -- before the Commission and I'm representing here. I think that it would not be of assistance to this Court, certainly would not be to the industry, if the matter of the application of the statutory standards was allowed to go by the board and if this Court was not aware of the circumstance, which brought forth the five criteria which are now specified in Section 209 of the Act, you will recall that with respect to what Congress was doing in 1957, it was imposing on contract carriers in that statute, a new restriction, something entirely new and different and intended to have a very distinct limitation on the competitive impact of an individual contract carrier on the common carrier operation. And that restriction was to be found in giving the Commission new power, never before held in 1957, to identify the shippers by name that that contract carrier would be permitted to serve. And that had a very significant effect upon the ability of the contract carrier to compete then and in the future as it does on Mr. Reddish. Let us take for example, the question here just before this Court. If it is a fact that the Steele Canning Company is not going to refuse to go to private carriage, Mr. Reddish would be one who suffers if they go because he no longer has the authority which he would've had prior to 1957 to search for another canning company in this area to serve. He is bound now and for all of the time into the operations of the Steele Canning Company or the Cain Canning Company and then the Keystone Canning Company. Now, that competitive impact that that carrier can make as a result of the 1957 Amendment made a very distinct difference and what the Commission was to consider when they came to considering the impact on existing carriage. And if you will look at the criteria in the statute, you will see that the criteria is not a direction to the Commission to consider the impact on all common carriage or the entire common carriage system of the United States. The question the Commission is directed to or points its attention to is whether or not the grant of the authority will affect the services of the protesting carrier, not the services even of all carriers in United States, but the protesting carriers alone. And secondly, the impact on the services of those carriers because now for the first time in 1957, it was possible for the Commission to determine precisely what the effect would be now, and in the future perhaps or at least to make a judgment with that respect in that connection because they could now, for the first time, determine what the shipper was and who he would be now and in the future. And so, you can look at Steele Canning Company's present services. You can look at their present transportation. You can look at what has been performed in the past and what is likely and make a judgment as to what is to what's likely to be performed in the future and be able to make a determination of whether the services of the protesting common carriers or protesting contract carriers although how there could be and in view of the limitation of by shipper's by name, I don't not know. But in any case, you could make a determination precisely of the effect, that that kind of a grant would have on the protesting carrier. And the Commission never did that in this case. The Commission instead resorted to precisely those tests which they had adopted prior to 1957 under a definition of a statute which said that they were to determine whether it was consistent with the public interest in the National Transportation Policy unguided by any specific criteria. The Commission applied in this case in short, precisely those standards that they had applied previously to a contract carrier who would have the free and unrestrained right to, as this Court held in the Contract Steel Carriers case the right aggressively to search for and add new contracts within the scope of these geographical license and within the scope of the commodity was authorized transport. Now, that this 1957 Amendment constituted a marked departure from the Act prior to 1957 is I think crystal clear from the determination of the way in which Congress ordered the Commission to deal with the pre-existing contract carrier. Prior to 1957, the contract carrier is free to compete for potential traffic as well as the traffic of the shippers who appeared before the Commission and testified. These pre-1957 contract carriers were to be given under this 1957 Amendment, certificates of public convenience and necessity to operate as common carriers and they were to be given these solely on the basis of whether or not they conform to the new definition of contract carriage, one that said for one or a limited number of shippers meeting the distinct needs of those individual shippers. If you did not meet that new standard, you were to be given a common carrier of certificate. You were to be turned into what Congress found you were in fact to wit a common carrier. And therefore, when you approach and apply the five criteria, that are now specified in Section 209 (b) of the Act, you have a situation in which it is entirely possible that you have specific criteria by which you can -- in a specific factual situation by which you can measure that impact. The Commission never did that here. There is nothing to suggest that the services of the protesting carriers in this case would in anyway be affected, nothing. Their finances, their equipment, the services that they are rendering to the public generally, nothing in this record suggests one word as to what in any way that would be affected and that is the precise and as I take it, legal significance of the fact that this shipper has -- or the shippers involved here have in the past transported these shipments in their own private carriage, and this illegal significance of the fact that these -- the finding of the Commission that these shippers would do so in the future because of their distinct need if not met by contract carriers. The 1957 Amendments to the Part II of the Interstate Commerce Act were designed to give the Commission that which said it needed so desperately. A yardstick by which they could distinguish between a contract carrier and a common carrier, one that the Commission told Congress at the time or the committee is considering it that contract carriers have inherent differences and inherit advantages in the way in which they operate. They have inherent advantages because they are keyed in. They are locked in to the shippers operation. The shipper loads their vehicle. The vehicles are scheduled to go into their production either inbound or outbound movements of it. You don't have to employ a core of solicitors to go around and find new freight. You have only one or two shippers and you're so coordinated with them. You are, in fact, as the examiner in fact found in this case the shippers wanted Mr. Reddish to be, the transportation department of these canning companies. You don't need solicitation expense and Mr. Reddish doesn't have any solicitors or any solicitation expense in getting that kind of traffic. You don't have to have any terminal. Mr. Reddish doesn't have a terminal. He has a garage where he keeps his equipment off. You don't need to have a terminal because you are not involved in the handling and re-handling of the freight as a contract carrier. And as a consequence, you have precisely those inherent advantages that the Chairman of the Commission himself pointed out that Congress when they were considering common contract carriers in the 1957 Amendments to this Act, that realized cost advantage. Cost advantage is that the Chairman told the committee they had and that the Commission has always recognized that they had. The question that the shippers were trying to put forward to the Commission was not that the common carriers were charging them an unreasonable or a burdensome rate considered as a common carrier rate, considered as the necessary to carry out the expenses to discharge the obligations and the burdens and the kind of service that a common carrier is expected and required to do under the Act. These rates are entirely lawful. They are reasonable judged by that standard. But we're not judging them by that standard. We're not -- the shipper is not asking for them by that standard. The shipper is asking for something entirely different. He's asking for that which prior to 1935 would have been called private for hire transportation, a kind of a transportation that is a substitute not for common carriage but a substitute for his own private carriage. And now what happened in this case, what the Commission finally did by insisting that the shippers' reasonable transportation need as they would choose to define, found within their prior concepts of transportation, by doing that, the Commission has ignored what was intended, what -- I believe that the legislative history and what the Act itself suggests that private carriage was to be supplanted by or at least the shipper was to have an alternative of, to private carriage contract carriage, a contract carriage that was so distinctly related to what he needed, that it would perform the kind of job that a regular common carrier serving off the public generally could not perform. But the Commission, by refusing to apply the statutory criteria, and by saying that the criterion of the impact or the effect upon the shipper of the denial of this application, is in effect that we will judge solely in terms of whether or not someone can in fact physically transport a shipment of canned goods from point A to point B regardless of the time it takes them to transport it and most importantly for a canned good shipper regardless of the cost that which that will be performed for you is denying to the private -- to the contract carriers under the 1957 Amendment, precisely what Congress was intending to give them. If we are going to limit you on the one hand, to serving this precisely identified shipper, then we will give you the opportunity on the other hand to serve his distinct needs and we will measure whether or not you should be a new entered into the field by the considerations of those shippers, by consideration of whether you will in fact hurt in some way that the existing common carrier transportation system of the United States.
William J. Brennan, Jr.: But what do you envisage was the appropriate consideration on the question of hurt in some way?
Richard A. Solomon: As for example Mr. Justice Brennan, supposed that this shipper was not in fact a shipper who was giving to the contract carrier something they hadn't transported before that is where it was not a private carriage situation but where the shipper said we want you to transport these goods and these goods were already being transported by a number of common carrier. It seems to me that under those circumstances the common carrier should come in.
William J. Brennan, Jr.: Well, how about the situation where the common carrier had never transported these goods to this particular class of act?
Richard A. Solomon: I think if he could show that he is in such financial condition that he must be given an opportunity to transport them, that his existence to the common carrier industry because of his financial standing --
William J. Brennan, Jr.: Even though he's never had it before --
Richard A. Solomon: Even though -- if he could show that his financial existence required that he'd be given an opportunity to transport all potential traffic because to do so would destroy in some way, the fabric or the kind of system that the Commission has built up. It is conceivable that the Commission might then say, “Show us your financial condition. Show that your needs or -- for this traffic outweigh the shippers specialized in individual needs.” That is a conceivable possibility. I wouldn't -- I wouldn't restrain the Commission's ability to consider what they thought was necessary to maintain a common carrier system of transportation by rail or by motor but that's not what they did here. They didn't do that at all. There was no suggestion that the loss of this traffic now or in the future would in any way affect the finances of the protesting carriers or would in any way affect the kind of operation that they were conducting or would in any way do anything else to these carrier of a specific nature. What the Commission held here was consistent with their holdings prior to 1957, that a common carrier expressing a willingness and showing to the Commission satisfaction at least the ability to transport these shippers, that that common carrier was to be permitted the opportunity to transport those goods and that no other service was to be authorized even though the Commission at the same time held that on this record, they would never transport those goods and that is a flat and specific finding by the commission.
William J. Brennan, Jr.: Even though the common carrier, the protesting common carrier would --
Richard A. Solomon: Would never handle it. If you'll just take a look at --
William J. Brennan, Jr.: Well, that's -- that's by reason of the use of the alternative of a private carriage?
Richard A. Solomon: Certainly sir. Now, it maybe if the Commission did not believe the shippers, the Commission could weigh that fact and say, “We do not believe the shipper” but they never did that. They believed the shipper. They believe they would but what they chose to do was to adapt an interpretation of the statute that said even so you must.
Felix Frankfurter: That's because they were concerned with the decision of the revenues to be obtained from commercial trucking. And the Senate report emphasizes that their chief concern was with protecting common carriage because then it is a matter of reporting to the committee they had emphasis on that fact and he said that the public interest -- your committee is of the opinion of public interest and a sound transportation system and particularly in a stable and adequate system of common carriage require this bill.
Richard A. Solomon: He said that and he said it in my judgment because he was about to report a bill which would give the power to the Commission for the first time seriously to limit contract carriers, by specifying the shippers that they would --
Felix Frankfurter: I don't know why he said it. All I -- I don't go behind documents particularly of a Senate Committee that reports a bill which have these provisions.
Richard A. Solomon: Well that --
Felix Frankfurter: Without any private information.
Richard A. Solomon: That was the effect of what he was reporting out at that instant and that --
Felix Frankfurter: In fact, he said it in words for the committee that they were concerned to protect, and to share that the common carriage was to have if there was to be any commercial transportation.
Richard A. Solomon: And the statute did so Mr. Justice Frankfurter in my judgment by adapting a new restriction on contract carriage, and at the same time by adapting criteria that were relevant to the new and change status of the contract carrier, a new and distinctly limited, competitive service that the contract carrier would be able to perform and if the judgment is as transportation law, that you should not regard the existence of private carriage as an alternative, then all I could say would be that the statute will be wholly out of step with the reality of the economic need which moves these goods across the country.
Felix Frankfurter: I find that one word of reference and even the committee reports or the statute to the part that private carriage is to --
Richard A. Solomon: There is nothing in the Committee's report but there is substantial amount that was before the Committee at the time they were considering this bill and the substantial shippers all appeared before Congress and pointed out precisely the dilemma in which this kind of a judgment would place it.
Felix Frankfurter: Of course private interest properly present their private view, their particular private interest but that doesn't mean that every private interest represented before a committee requires me to assume that that was right into the committee report or into a statute when it doesn't appear there.
Richard A. Solomon: In any case, the Interstate Commerce Commission and in passing upon the question of whether or not there would be an impact on the shipper from an effect of the denial of the application and the suggestion made to this Court that there was any finding by the Commission that the existing service of the common carrier was in fact adequate to meet the needs was never meant in any terms exclusive of cost or even laying aside an issue of cost. The Commission said that such an issue is the other side of the coin, perhaps it is. If common carriage is in fact demonstrated to be adequate to meet the shippers' transportation needs then it would seem that there would be less of an effect upon the shipper if you deny the application of the contract carrier. Although, the Commission in the Reddish case said that such a determination was necessary upon them under the new 1957 Amendments of the Act, they never made such a determination, never. The Commission's decision in the Reddish case is couched wholly in terms of -- the shipper has failed to prove that the existing service would not meet his reasonable transportation needs and despite the fact that the shipper resided a number of instances, in which for example, it was proposed by one common carrier to him that in order to transport goods to Iowa and to Illinois that they transport them to Denver, Colorado from Fort Smith, Arkansas and then back. They said this is generalized kind of comment. This is a generalized kind of objection and that they never, however, reach any determination that the existing service would in fact meet any need of the shipper whether it's couched wholly in terms of cost or whether it's couched in terms of near service to get their canned goods that they had produced. If there are plants in Arkansas to the kinds of customers that they have to sell in order to remain in business and in order to sell that they will after either do and this kind of transportation service or in the carrier that is not regulated by the economic views of the Commission. Thank you Mr. Chief Justice.
Earl Warren: Well, I think the other side has about two minutes if it wishes to use it.
Richard A. Solomon: We having nothing more to say.
Earl Warren: Alright, thank you.