Court Opinion

ID: 6890060
Source: CourtListenerOpinion
Date Created: 2022-07-23 21:39:01.918843+00
Date Added: 2024-06-11T16:05:48.964866
License: Public Domain

On Petition for Rehearing.
MARIS, Chief Judge.
The complainant filed a petition for rehearing in which it again urged that the order of the Administrator denying its application for adjustment was arbitrary and capricious. While the petition raised no new questions we requested and have received further argument by way of briefs with respect to two of the questions originally raised. It will, therefore, be appropriate somewhat to elaborate these two points.
The complainant strongly asserts that it Was arbitrary for the Administrator to refuse its application for adjustment on the sole ground that its rate of profit on sales had not fallen below that enjoyed by the industry as a whole during the prewar years 1936 to 1939. In his opinion denying the complainant’s protest the Administrator placed his action principally upon (his ground.
In our prior opinion we stated that it is entirely reasonable for the Administrator to employ objective standards to test the merits of the applications for individual adjustments under Section 1421.157(a) of the Regulation. To this view we adhere. We held that it was not unreasonable in the complainant’s case for the Administrator to employ one such standard, the rate of profit on sales earned by the industry generally in the prewar years, as the sole criterion for determining the necessity of granting relief. After further consideration we now think that it may well be unreasonable for the Administrator to employ this or any other single standard as the sole criterion for this determination.
The regulation itself provides that such adjustments shall be based “upon a consideration of changes in applicant’s costs of production, his over-all returns and such other circumstances as may be pertinent to the maintenance of an adequate supply of gray iron castings needed for the war effort”. It thus appears that a number of objective factors are specifically indicated as necessary to be considered.
The transcript of the protest proceedings discloses that before the administrator denied the complainant’s application for adjustment he did take into consideration all the factors indicated in the regulation and not merely the rate of profit on sales. Thus it appears from his opinion denying the application that he took into consideration the wage increase granted by the National War Labor Board and the other cost increases to which the complainant pointed. He also considered as relevant factors the 70% increase between 1936 and 1943 in the salaries of the officer-stockholders and the 100% increase in dividends during that period. He pointed out that the complainant’s profits even after giving effect to the recent wage increase, still amounted to close to 60% on net worth. Finally he noted that the complainant’s profits, after giving effect to the wage increase, amounted to nearly 5% on sales.
Likewise, in the opinion denying the complainant’s protest the Administrator, while placing strong emphasis upon the amount of profit on sales, also gave weight to the other factors enumerated in the regulation. He expressly stated that the order denying the application “was issued after due and adequate consideratioñ of changes) in Protestant’s cost of production, its over-all returns and such other circumstances as may be pertinent to the maintenance of production of gray iron castings,” and he found *860the additional evidence submitted in the protest proceeding “insufficient to warrant the re-opening of the adjustment proceedings”.
We adhere tq the view that the Administrator’s denial of the application was not unreasonable in the light of all of the factors which he took into consideration. Moreover we think it is clear that the factor which the Administrator most stressed, the profit realized on sales' by the applicant as compared to the industry as a whole, is a factor of primary significance. The application of the industry profit on sales standard assures the complainant a profit on its sales during the present war period which will at least equal that enjoyed by the industry generally during the prewar years 1936 to 1939.
 This brings us to the second question raised by the complainant. It strenuously urges that the Administrator’s use of 4% as the historical ratio of profit to sales in the prewar industry is arbitrary and capricious. The complainant has offered no evidence to controvert the 4% figure, however, but asserts that its erroneous character is revealed by the statistical data set out in the statement of considerations accompanying the issuance of Maximum Price Regulation No. 244 under which the adjustment is sought.1 The presumption of validity which attaches to the Administrator’s determinations2 accordingly supports the figure of 4% unless the supporting data to which the complainant points establishes that it has been erroneously computed. After careful study of that data we are satisfied that it does support the Administrator’s determination and that the complainant has failed to establish the invalidity of the 4% figure.
Table III which is set out in the Administrator’s statement of considerations3 states the percentage distribution of sales in 1941 in the gray iron castings industry as among five different groups of firms classified according to size. Table IX4 states the median of the ratios of profits to sales in each of these groups of firms for the period 1936 to 1939, as well as for the years 1940 and 1941. The Administrator computed an average ratio of profits to sales for the entire industry for the 1936 to 1939 period weighted, in respect to the proportionate amount of the total business of the industry which was done by each group, by the use of the percentages of distribution of sales among the groups as shown by Table III. The ratio of profits to sales arrived at in this manner is 4.0027%.
The complainant contends, however, that it was arbitrary for the Administrator to use as the basis for his computations the median ratio of profits to sales which he found in each group instead of the average of the ratios of all the members of the group. We are not convinced that this objection is well founded. There are many statistical problems which cannot be solved accurately by the mere striking of a mathematical average. Compare the problem discussed in Safeway Stores, Inc. v. Bowles, Em.App.1944, 145 F.2d 836. The-use of the median of a group of comparable figures is a recognized statistical procedure for determining central tendency. The complainant has wholly failed to show that its use by the Administrator in solving the problem with which he was here confronted was so inappropriate as to be arbitrary or capricious. We accordingly cannot hold that the figure of 4% does not fairly represent the percentage ratio of profits to sales which the gray iron castings industry in general enjoyed during the prewar period.
The petition for rehearing will be denied.

 Pike & Fischer OPA Price Service, Metals & Machinery, p. 8001.

 Montgomery Ward & Co. v. Bowles, Em.App.1943, 138 F.2d 669; Philadelphia Coke Co. v. Bowles, Em.App.1943, 139 F. 2d 349; Gillespie-Rogers-Pyatt Co. v. Bowles, Em.App.1944, 144 F.2d 361.

 Pike & Fischer OPA Price Service, Metals & Machinery, p. 8004.

 Pike & Fischer OPA Price Service, Metals & Machinery, p. 8008.