Court Opinion

ID: 9308501
Source: CourtListenerOpinion
Date Created: 2022-12-02 17:19:40.92438+00
Date Added: 2024-06-11T17:14:01.942209
License: Public Domain

ROBERT P. ANDERSON, Judge
(dissenting):
As my views concerning the pertinent regulations, the action taken by the COLC and the Price Commission, and the applicable law, differ from that of the majority, I must respectfully dissent from its holding.
The present case arose during Phase II (November 13, 1971 to January 12, 1973) and Phase III (January 13, 1973 to, at least, June 13, 1973), during which the Phase I definition of “transaction” was no longer operative. In its place, between December 15, 1971, the effective date of 6 C.F.R. § 300.51 issued by the Cost of Living Council, and June 13, 1973, the effective date of Executive Order 11723, there was in force the regulation, § 300.51, above cited, which provided that “. . .'a service organization may not charge a price in excess of the base price . . . until the Price Commission has approved that price in excess of the base price . .” The “base price” for purposes of this regulation was defined as the highest price charged by the seller for a “transaction” in a similar service during the period August 16 to November 13, 1971. 6 C.F.R. § 300.405. “Transaction” was defined as “. an arms-length transaction and is considered to occur at the time and place a binding contract is entered into between the parties.” 6 C.F.R. § 300.50. The Price Commission established in a formal determination, 38 Fed. Reg. 3997, that, for the purpose of determining the base price for advance ticket sales for sporting events, “. . . the transaction occurs at the time the tickets are sold . . . .”
During this period tl*e Washington Redskins applied to the Price Commission in late 1972 to increase the price of its tickets for its 1973 games by an average of $2 a ticket. The Price Commission in December 1972 granted the Redskins authority to make the increase; •and, in reliance on this ruling and the regulation defining the word “transaction” as occurring when a binding contract is entered into between sellers and purchasers of tickets, the Redskins, in March 1973 announced the increase in the price of the tickets for the 1973 games. It sold the tickets before June 1973 and expended or committed itself to expend substantially all of the proceeds, amounting to approximately $180,000, in preparation for the games to be played later in the year.
Thereafter the President promulgated Executive Order 11723 which provided that from June 13 to August 12, 1973 (the 1973 freeze period) it was unlawful for a seller to charge a price for any commodity or service which exceeded the highest price charged during a “transaction” in a similar commodity or service which was completed either during June 1 to June 8, 1973 or, if there was none during that time, then during the nearest 7-day period in which such a transaction was completed. The order completely changed the definition of “transaction” so that the relevant event for the determination of the base price was not the making of the contracts for the sale of the tickets, but the actual playing of the game, as it had been during Phase I. The Redskins had scheduled two games which came within the freeze period; the Department of Justice charged that the increased price paid to the Redskins for the 1973 season was unlawful under the Executive Order and that the price could not exceed that charged in 1972. This action resulted.
*1404The position of the majority is that, although the Redskins had acted in good faith on the express authority of the Price Commission, and the making of the contracts had been completed in full conformity with the Commission’s ruling and the existing regulations, nevertheless, the intervention of the changed definition of “transaction” before the games were actually played, in effect, rendered nugatory the administrative regulation as it existed in December 1972 and the administrative determination made within its provisions pursuant to which the Redskins had sold the tickets.
In my opinion a grave difficulty with such a holding in the present case is that, although Executive Order 11723 defined “transaction” as the “playing of the game,” neither it nor the statute underlying it, made any provision for the retroactive abrogation of a regulation and ruling of the Price Commission lawfully made and the setting aside of the lawful actions taken in good faith by a person in whose favor the ruling was made, thus subjecting the person to loss and possible penalty. The Government’s claimed power rests on nothing more than a so-called clarification of Executive Order 11723 in “Freeze Group Question & Answers # 4.” It is unsupported by statute. Moreover, neither the Executive Order nor the administrative “clarification” stated, as is required, that it was necessary to the effectiveness of the statutory and regulatory scheme, that the contractual rights of a party in the position of the Redskins be retroactively abolished or that it be compelled to suffer loss as was the case here, even though its rights were acquired through reliance upon a prior administrative determination. Neither the statute nor the legislative history show an intent to clothe the Executive or its administrators with such power.
The majority decision relies largely on two prior decisions of this court which arose out of the sale of tickets for football games where the sales of nearly all of the tickets had been made prior to the imposition of any controls, i. e. prior to August 15, 1971, though they were for games actually played during the freeze of August 15 to November 13, 1971. University of Southern California v. Cost of Living Council, 472 F.2d 1065 (T.E.C.A.), cert. denied, 410 U.S. 928, 93 S.Ct. 364, 35 L.Ed.2d 590 (1973), and DeRieux v. Five Smiths, Inc., 499 F.2d 1321 (T.E.C.A.), cert. denied, 419 U.S. 896, 95 S.Ct. 176, 42 L.Ed.2d 141 (1974).1
During this initial or Phase I period of control, launched by Executive Order 11615, the definition of the central and governing word, “transaction,” in the determination of all of the ticket price cases, meant the playing of the game or the performance of the athletic event and not the making of the contract for, or the actual sale of, the tickets. As the University of Southern California and Five Smiths cases arose during this Phase I period the appellants in those cases argued that, because no controls at all were operative during the time within which they sold the tickets, they had a perfect right to increase the ticket prices, and that the Office of Emergency Preparedness and the Cost of Living Council could not, by regulation, reach back and declare the sales invalid on the ground that the games had not actually been played, or in other words, the transaction, embraced within the regulations had not yet occurred. This court properly, upheld the authority of the executive commissions to invalidate the *1405price increases in these circumstances. By analogy to these cases the majority upheld the action of the executive authority in ordering the Redskins to refund the increases in ticket prices charged for the 1973 games, actually performed during the 1973 freeze period; but it is my opinion that the University of Southern California and Five Smiths cases should be distinguished from the case before us.
The regulations which applied to the University of Southern California and Five Smiths cases were no longer in operation when the Redskins’ sales of tickets took place. During the Second Phase, November 13, 1971 to January 11, 1973, and the Third Phase to June 13, 1973, the definition of “transaction,” for the purpose of the regulations, was radically changed from the actual rendering of the service, i. e. the playing of the game itself, for which the tickets were bought, to the making of the contract for the sale of the tickets. Price Commission Ruling 1972 — 73, 6 C.F.R. 349 — 350 (1973).
The second distinguishing feature of the present case is that the Redskins made application to the Price Commission for the authority to charge an increased price for the 1973 season; and the Price Commission expressly granted the authority and held the increase to be lawful. When, after the tickets had been sold in reliance on the Commission’s ruling and the 1973 Executive Order 11723 had been issued, the executive authority, in effect, revoked the Price Commission’s ruling of December 15, 1972 and ordered the Redskins to pay back to the purchasers the increase in the price of the tickets, it raised an issue not present in either the University of Southern California or the Five Smiths cases; and that is whether the executive authority, acting directly or by a Board or Commission, can reverse a ruling 'made many months before, which was clearly lawful at the time, on which the petitioner has relied and on the reversal of which it is bound to suffer substantial loss or damage. It was plainly foreseeable at the time of the Commission’s ruling that the prices of tickets concerned those to be sold for the 1973 football season, customarily occurring in the late summer and fall; that the Redskins intended to rely and act upon the authority granted by the Commission for which the Redskins had applied; and that it intended to sell the tickets and expend the proceeds well in advance of the opening of the season and in preparation for it. This brings the case within the ambit of “second impression” cases in which an administrative officer or commission by retroactive ruling, reverses a ruling made some time before, which was lawful at the time it was made but which the administrative authority later decides to overrule. This is an area which opens the door to arbitrary and capricious administrative action, and a duty rests upon the courts to safeguard the interests of persons affected by such retroactive changes in regulations and make certain that the retroactively applied changes are justified, are reasonably necessary to meet the emergency for which the legislation was enacted and are under all the circumstances fair and equitable.
The majority hold that the ruling of the COLC in December of 1972 approving the Redskins’ increased price for tickets was not retroactively set aside by Executive Order 11723 and the implementing action by the COLC, because the Government’s actions were directed toward forbidding the playing, during the 1973 freeze, of football games for which tickets had been previously sold. It was, therefore, in their view, prospective in its intended result.2 But this is *1406so, if at all, only in an extremely narrow sense, which fails to give consideration to all of the relevant circumstances. The operative effect of the Order and regulations was to invalidate a ruling of the Price Commission, made in December 1972, on which the Redskins relied, expressly authorizing it to increase its ticket prices for the 1973 season. Moreover, the Redskins by relying on the validity of the ruling, was exposed to serious financial loss and damage, as well as possible penalties, when the Executive Order and the regulations with their new definition of “transaction” were put into force with retroactive application. This is just as retroactive in its thrust and consequences as if the executive authority had on June 1, 1972, declared its ruling of December 1972, granting the Redskins the right to increase its ticket prices for the 1973 season, invalid and revoked, without any finding of necessity or justification in meeting an emergency, or any consideration of the reasonableness of the action. If an administrative agency simply by redefining a word, such as “transaction”, and calling “incomplete” and “unlawful” a past event which was “complete” and “lawful” at the time it occurred and on which a party, in good faith has relied to its damage, then administrative commissions may at will circumvent judicial scrutiny of unreasonable retroactivity.3
This is not to say that the executive authority can under no circumstances make a retroactive ruling or order which reverses a former ruling or order of the same authority. This is a “second impression” ruling and where, following the prior ruling or order, persons in good faith have acted in reliance upon it and a “second impression” reversal will place them in a position where they will suffer loss and damage, the executive authority, in making such a change or reversal, must expressly announce the retroactive effect, the need and justification for placing those who relied upon the earlier ruling or order in a position where they will suffer such damage, and the reasonableness under the circumstances of taking such action.
Retrospective operation should not be given to a statute or administrative regulation which interferes with antecedent rights unless such be the unequivocal import of the terms used in the statute and regulation.
In Greene v. United States, 376 U.S. 149, 84 S.Ct. 615, 11 L.Ed.2d 576 (1964), pursuant to a 1955 Department of Defense regulation, the petitioner made a claim for certain monetary restitution which was rejected by the Department which claimed that the case properly came under a 1960 regulation, issued while petitioner’s claim was being processed, and which the Department assert*1407ed retroactively covered petitioner’s claim, but which, to be invoked, would require a preliminary administrative determination, which petitioner argued did not apply to him and was not required under the 1955 regulation. The Supreme Court said:
“Whatever petitioner’s rights are, there can be no doubt they matured and were asserted under the 1955 directive. Not until six months after petitioner formally presented his claim to the Department of Defense did the Secretary of Defense issue a new, and substantially revised, regulation concerning ‘monetary restitution.’ Thus the Government’s argument necessarily requires that the 1960 regulation be given retroactive application. As the Court said in Union Pac. R. Co. v. Laramie Stock Yards Co., 231 U.S. 190, 199, [34 S.Ct. 101, 102, 58 L.Ed. 179,] ‘the first rule of construction is that legislation must be considered as addressed to the future, not to the past [and] a retrospective operation will not be given to a statute which interferes with antecedent rights . . . unless such be “the unequivocal and inflexible import of the terms, and the manifest intention of the legislature.” ’ [footnote omitted] Since regulations of the type involved in this ease are to be viewed as if they were statutes, this ‘first rule’ of statutory construction appropriately applies and under the circumstances, it would be unjustifiable to give the 1960 regulation retroactive effect.” 376 U.S. at 160, 84 S.Ct. at 621.
See also Retail Wholesale and Department Store Union, AFL — CIO v. NLRB, 151 U.S.App.D.C. 209, 466 F.2d 380, 390-393 (1972).
This court has confirmed the principles, enunciated in this dissent, relating to retroactive rulings by administrative bodies which set aside prior actions which were lawful when performed. Although the principal issue in the case concerned the right of individuals to pursue a private cause of action for damages, resulting from alleged violations of the Economic Stabilization Act, it had to touch on the matter of retroactive application of a statute or regulation. In Fa-gundez v. Oakland Raiders Professional Football Club, 498 F.2d 1394 (T.E.C.A. 1974), Judge Carter said at page 1395:
“Plaintiffs have no cause of action based on the 1971 Amendment Act, because that Act was enacted at least four and one-half months after plaintiffs had purchased and received their tickets. Statutes are given only prospective application unless there is a clear and unambiguous legislative intent that they are to operate retroactively. Hassett v. Welch, 303 U.S. 303, 314, 58 S.Ct. 559, 82 L.Ed. 858 (1938); Greene v. United States, 376 U.S. 149, 160, 84 S.Ct. 615, 11 L.Ed.2d 576 (1964); Soria v. Oxnard School District Board of Trustees (9 Cir. 1972) 467 F.2d 59, 60.
No such intent to make the 1971 Act applicable retroactively so as to create a cause of action ex post facto appears in the statute or the legislative history.”
It is my opinion that the Government’s motion for summary judgment should be denied; and that the defendant-appel-lee’s counter-motion for summary judgment should be granted and the complaint dismissed.

. People of State of California v. Simon, 504 F.2d 430 (T.E.C.A.1974), relied on by the ap-pellee is not apposite. In that case this court sanctioned the retroactive application of a regulation promulgated February 21, 1974, by the Federal Energy Administration, abolishing the exemption of state and local governments from'oil price controls. Critical to the holding in that case, however, was the issuance of a notice on October 25, 1973, stating that such a change was contemplated and that if it were made, it would be retroactively effective from the date of the notice, i. e. October 25, 1973. The parties adversely affected, therefore, were aware of the proposed change, and any reliance after that date upon the exemption was at their own risk. No such notice was provided in the present case.

. Actually Executive Order 11723 which imposed the 1973 freeze on prices provided: . . no seller may charge ... a price . . . which exceeds the freeze price . .” The event subject to price controls was the mere “charging” of prices. The Redskins did not charge any prices during the 1973 freeze period, it merely performed services already paid for. *1406Moreover, Executive Order 11615, which implemented the Phase I price freeze differed from the language contained in Order 11723 in the following important respect: While Order 11723 provided: . no seller may charge ... a price . . . which exceeds the freeze price . . . .” Order 11615 read: “No person shall charge ... in any transaction prices . . higher than those permitted hereunder . . . ” (Emphasis added.) The definition of “transaction” under Order 11615, therefore, was crucial for purposes (1) of establishing the base period price and (2) for determining if an event during the freeze period would be subject to price controls. “Transaction” under Order 11723, on the other hand, was relevant for purpose (1) alone. The holding of this court in both University of Southern California and Five Smiths rested upon the fact that the defendants had engaged in the “transaction,” i. e. played football games, during the freeze period, for which they charged prices higher than those charged during the last base period transaction. See especially 499 F.2d at 1326-27.
The invalidation of the price increase at issue in this case, therefore, is not clearly contemplated by the Executive Order, and it has not been shown to be critical to the success of the administrative policy embodied in that Order and the implementing regulation.

. The theory of the majority may also permit administrative agencies in the future to disregard with impunity the strictures imposed by the ex post facto provision of the due process clause, a problem averted in this case by the Court’s characterization as “inappropriate” the penalties which the Government had sought to impose.