Opinion ID: 292748
Heading Depth: 2
Heading Rank: 1

Heading: Atlantic Coast Line R.R. v. Florida.

Text: 78 In Atlantic Coast Line, supra, the Supreme Court denied restitution to shippers; the facts of the controversy are as follows. Rail carriers in Florida had voluntarily established certain intrastate rates, which were later approved as maximum rates by an order of the Florida State Commission. The Interstate Commerce Commission instituted an investigation in which it found that those rates were confiscatory and resulted in discrimination against interstate commerce. It prescribed a new schedule of rates higher than those set by Florida. Florida sought judicial review of the ICC order, and the Supreme Court set aside the order on the grounds that the Commission had not made adequate findings. Florida v. United States, 282 U.S. 194, 51 S.Ct. 119, 75 L.Ed. 291 (1931). The Commission then held a new hearing, made new findings and prescribed its same higher rate schedule for substantially the same reasons as before. The Supreme Court affirmed this second order. Florida v. United States, 292 U.S. 1, 54 S.Ct. 603, 78 L.Ed. 1077 (1934). The State of Florida and other shippers meantime brought suit in the district court for restitution of the difference between the higher rates charged by the railroads and the approved state rates for the period between the issuance of the first invalid order of the ICC and the date of its ultimate reversal because of procedural defects in not supplying adequate findings justifying the order. The district court allowed partial restitution of these rates. The Supreme Court, in an opinion by Justice Cardozo, reversed, holding that the shippers were not entitled to restitution on these facts. Atlantic Coast Line R.R. Co. v. Florida, 295 U.S. 301, 55 S.Ct. 713, 79 L.Ed. 1451 (1935). 79 Justice Cardozo's opinion specifically recognized that the principle of restitution was applicable to the situation, but held that the equities of that situation favored permitting the carriers to retain the charges, '   restitution is without support in equity and conscience.' Id. 312-313, 55 S.Ct. 718. Three reasons were advanced as to these equitable considerations. First of all, the carriers had collected the higher rates by virtue of their compliance with the ICC order. The court noted that the carriers were not free to refuse obedience to the order. Secondly, the factual basis for the ICC order setting higher rates-- the discrimination against interstate commerce by the lower rates-- existed in fact at the time of that first order; and this discrimination was declared unlawful by statute. The order was invalid for procedural reasons only (incomplete and inadequate findings), not because it was based on an improper determination of the facts. In other words, the factual justification for the higher rates was in existence at all times and had been specifically approved by the ICC. Thirdly, the lower rates which the shippers contended should be the measure of restitution were confiscatory. The Court observed: 'A situation so unique is a summons to a court of equity to mould its plastic remedies in adaptation to the instant need.' 295 U.S. at 316, 55 S.Ct. at 719. Furthermore, the Court was expressly motivated in allowing the carriers to retain the higher rates by considerations of the deference due to the expertise of the ICC and of accommodation of the judicial process to the administrative process. Thus, to affirm the retention of the higher rates would be consistent with the action of the ICC, whereas to order restitution, in addition to being inequitable, would be inconsistent with the ICC's action. 80 The facts of the instant case contrast sharply with those of Atlantic Coast Line. Here, the carriers have charged higher rates, not in compliance with an ICC order, but in spite of that order and only by the use of judicial restraint subsequently held to have been improvidently granted. The ICC has ordered the increases in this case canceled, rather than ordering lower rates raised. In Atlantic Coast Line, the Commission found as a fact that the higher rates were justified, and this finding was ultimately sustained by the courts. Here the Commission found that the higher rates were not justified, and on the hearing for the interlocutory injunction, the court found that the carriers presented no evidence suggesting that this finding would likely be disturbed. The lower rates to which restitution was sought in Atlantic Coast Line were found by the Court to be confiscatory upon satisfactory proof presented by the carriers. Here the carriers contended both before the Commission and the district court that the lower rates would be confiscatory, but failed to carry their burden of proof in either forum. Finally, in Atlantic Coast Line, to order restitution would have been inconsistent with the administrative process, whereas here restitution is not only consistent, but as developed more fully below, denial of restitution would be inconsistent with the administrative process. 81 Implicit in the carriers' reliance upon Atlantic Coast Line is the assumption that that case held that under no circumstances could restitution be awarded to shippers. This assumption is without foundation either in the language of that opinion or in subsequent interpretations of that decision. Indeed, subsquent decisions of both the Supreme Court and other courts have read the case to authorize reference of certain issues to an appropriate administrative agency in order to aid courts in devising restitutional remedies for parties before them in cases involving those agencies, even where the agency itself has no authority to award such restitution. The authority for this position follows from Justice Cardozo's reliance on the first invalid ICC order finding the rates to be unjustly discriminatory. 82 The case most nearly analogous to the present situation is United States v. Morgan, 307 U.S. 183, 59 S.Ct. 795, 83 L.Ed. 1211 (1939). Involved in that case was an order of the Secretary of Agriculture under a statutory scheme of regulation of stockyards (7 U.S.C. 181-229) similar to that of the Interstate Commerce Act regulating motor carriers. The stockyard owners were required to charge rates which were 'just, reasonable, and non-discriminatory, and any unjust, unreasonable, or discriminatory rate of charge is prohibited and declared to be unlawful.' Cf. 49 U.S.C. 316(d) (Motor Carriers). The rates were to be established by filing a schedule with the Secretary. The Secretary, upon complaint or on his own initiative, could investigate the schedules, and if he found that they violated the Act, could prescribe new ones for the future; but if the investigation was on his own initiative, he could not award reparations for the past rates. Acting on his own initiative, the Secretary set aside a schedule of rates and prescribed lower ones. Suit was commenced to enjoin the order, and the district court issued a temporary restraining order on the condition that the stockyard owners deposit the difference between the two rates in a fund in court. The Supreme Court held the Secretary's order invalid because the Secretary had failed to accord the stockyard owners the full hearing required by the Act, and the case was remanded for further proceedings. Morgan v. United States, 298 U.S. 468, 56 S.Ct. 906, 80 L.Ed. 1288 (1936); 304 U.S. 1, 58 S.Ct. 773, 82 L.Ed. 1129 (1938). Thereupon, while new proceedings were pending before the Secretary, the district court ordered the impounded fund to be returned to the owners, on the grounds that the lower rates had been required by an invalid order. The Supreme Court reversed, relying in part on Arkadelphia, Ex parte Lincoln Gas, Baltimore & Ohio R. Co., and Inland Steel Co., all discussed above. Most significant for purpose of this discussion was its reliance on Atlantic Coast Line. 83 Two principles governed the Court's decision. First of all, judicial review of administrative action should be coordinated as nearly as possible with the agency action so as to attain the ends of the statute. Secondly, 'in exerting its extraordinary powers (as a court of equity) to stay execution of a rate order,' the court had the duty to protect both the litigants and the public. 307 U.S. at 191, 59 S.Ct. at 800. '(A) court of equity should be astute to avoid the use of its process to effectuate the collection of unlawful rates, and equally so to direct it to the restitution of rates which it has taken into its own custody, once they are shown to have been unlawful.' Id. at 194, 59 S.Ct. at 801. Of course, as the Supreme Court itself subsequently noted, the fact that in fashioning its remedy the district court had ordered payments of the fund into court is immaterial to the basic underlying principles. See Addison v. Holly Hill Co., 322 U.S. 607, 621, 64 S.Ct. 1215, 88 L.Ed. 1488 (1944). Although the Secretary himself could not order restitution, Atlantic Coast Line was read as authority for him to make a suitable order which would justify the court in awarding restitution to the customers of the stockyards. 307 U.S. at 192 et seq., 59 S.Ct. 795. 84 It would unduly prolong this already extensive opinion to discuss in detail all the other cases dealing with Atlantic Coast Line. It will be sufficient to point out that none of them has interpreted that case to preclude restitution in a case where it is clearly warranted under facts similar to the instant situation. See, e.g., Federal Power Commission v. Interstate Natural Gas Co., 336 U.S. 577, 583, 69 S.Ct. 775, 93 L.Ed. 895 (1949); Berthold-Jennings Lumber Co. v. St. Louis, I.M. & S. Ry. Co., 80 F.2d 32, 40 (8th Cir. 1935); Williams v. Washington Area Metropolitan Transit Commission, 134 U.S.App.D.C. 342, 415 F.2d 922, 942-944 (1968), cert. denied, D.C. Transit System v. Williams, 393 U.S. 1081, 89 S.Ct. 860, 21 L.Ed.2d 733 (1969); Bell v. United States, 49 F.Supp. 505 (E.D.La.1943).