Summary
In West India Fruit S. S. Co. v. Seatrain Lines, Inc., 170 F.2d 775 (2d Cir. 1948), petition for cert. dismissed 336 U.S. 908, 69 S.Ct. 514, 93 L.Ed. 1072 (1949), the plaintiff Steamship Company had instituted suit to restrain the defendant from putting into effect its rate reduction pending a decision by the United States Maritime Commission in a proceeding then before it involving the rates.
Summary of this case from Federal Maritime Commission v. Atlantic & Gulf/Panama Canal ZoneOpinion
No. 81, Docket 21126.
November 5, 1948.
Appeal from the United States District Court for the Southern District of New York.
Action by West India Fruit Steamship Company, Inc., against Seatrain Lines, Inc., to restrain the defendant from putting into effect its rate reduction pending decision by the United States Maritime Commission, wherein such commission and others intervened as parties plaintiff. From an order granting temporary injunction, the defendant appeals.
Modified and affirmed.
Plaintiff, West India Fruit Steamship Co., Inc., operates as a common carrier by water in the transportation of property between West Palm Beach, Florida and Havana, Cuba. The defendant, Seatrain Lines, Inc., operates as a common carrier by water in the transportation of property between New Orleans and New York and Havana. On September 25, 1948, the defendant announced that it intended to cut its rates from New Orleans to Havana (which then were equal to its rates from New York to Havana, and West India's rates from West Palm Beach to Havana) up to 50% of their then level. On September 27, defendant announced actual rate-cuts of from 15% to 50% in its New Orleans service effective October 1, 1948. No rate-cuts have been made by defendant in its New York service. West India and defendant are the only two common carriers transporting in specially designed vessels, loaded freight-cars on their own wheels between ports of the United States and Havana. West India and defendant compete for traffic to Cuba. Shippers via defendant's New York and New Orleans services and via West India's service compete in the common market place of Cuba.
On September 29, West India filed a complaint with the United States Maritime Commission, alleging defendant's rate reduction to be unlawful, in violation of §§ 14, 16 and 17 of the Shipping Act of 1916, as amended, 46 U.S.C.A. §§ 812, 815, 817. The complaint alleged that defendant's rate-cuts were contrary to the policies and purposes of the Merchant Marine Act, 1920, as amended, 46 U.S.C.A. § 861 et seq., and the Merchant Marine Act, 1936, 46 U.S.C.A. § 1101 et seq. as amended, and likely to cause retaliatory rate-cutting by foreign lines operating in the trade between the United States and Cuba, contrary to the provisions of § 19 of the Merchant Marine Act, 1920.
With the approval of the Commission, West India began the present suit, seeking an injunction to restrain Seatrain from putting into effect its rate reductions, pending a decision by the Commission. Thereafter the Commission petitioned to intervene in the suit, stating in its petition that, in its opinion, the complaint filed with it by West India showed a prima facie case for the exercise of the Commission's jurisdiction, and that, unless the status quo were maintained pending a hearing and decision by the Commission upon the matters involved in West India's complaint, the Commission might be rendered powerless to protect the private and public interests which might be adversely affected by Seatrain's proposed new rates; that the proceeding instituted by such complaint will be promptly set by the Commission for hearing and expedited to the fullest possible extent; that with maximum expedition, a final order could not be issued in less than about seventy-two days from the filing of the complaint if the parties should insist upon formal procedure in accordance with the Commission's rules; that, with the consent of the parties, various requirements of those rules could be waived and a final order issued in approximately thirty days; and that, if the Commission's proceeding were terminated within thirty days favorably to Seatrain, its new tariff could be made effective within a period not materially in excess of thirty days from the date of its publication to the shipping public.
The district court granted the Commission's intervention petition and also petitions to intervene as parties plaintiff filed by the Ports of Palm Beach, Pensacola, Beaumont, Lake Charles, Houston and Galveston, supporting the injunction on the ground that Seatrain's rate-cuts would divert traffic from those ports; by Empresa Naviera de Cuba, S.A. and Lykes Bros. Steamship Company, Seatrain's competitors, arguing that Seatrain's action irreparably injured them; by the Trustees of Florida East Coast Railway Company, claiming that traffic over its lines would be diverted if the injunction were not granted; and by J.M. McCauley, a New York potato-dealer who argued that the rate-cuts unreasonably preferred Midwestern shippers and caused him to loose Cuban customers; the court also granted petitions to intervene as parties-defendant filed by Dakota Chief Sales Company and Piowatz-Bergart Co., midwestern potato-shippers who opposed the injunction on the ground that it would cause them severe loss in performing contracts made in reliance on Seatrain's reduced rates. This court permitted the City of New York to intervene in support of the injunction.
Upon motion of the plaintiff and plaintiffs-intervenors, the district court, after a hearing, issued an injunction restraining Seatrain from establishing or maintaining the rate-reductions announced September 25 or any similar reduction until the Maritime Commission issued a final order in the proceeding pending before it.
In its brief and in its oral argument in this court, defendant asserted that it would suffer irreparable injury because of the injunction on account of the following facts which apparently had not been stressed by defendant in the district court: Defendant, from 1934 until April 1947, had been a member of the Gulf South Atlantic Havana Steamship Conference, which is composed of divers steamship companies, the members of which maintain rates agreed upon by them. Shippers dealing with carriers belonging to the Conference must sign "exclusive patronage" contracts which provide that, if the shipper ships via non-Conference companies at less than the Conference rates, penalty rates 15% to 25% higher than the regular rates will be charged by the members of the Conference. Seatrain voluntarily withdrew from the Conference in April 1947 but until October 1st of that year adhered to the Conference rates. The Conference contract system provides that contracts with shippers are to be renewed from year to year unless notice of cancellation is received from a shipper within sixty days prior to the end of any calendar year, i.e., contracts are extended for another year, unless cancellation notices are received by November 1. On September 20, 1948, the Conference advised all shippers that the privilege of shipping through Seatrain "at Conference rates is extended through December 31, 1949." This had the effect of continuing Seatrain's privilege of participating in contracts during the calendar year 1949, provided Seatrain maintained Conference rates during 1949. On this basis, defendant, in its oral argument in this court, contended that, if the injunction were continued in force and if the Commission should not reach its decision before November 1, 1948, defendant would be cut off from making contracts with Conference shippers for the entire calendar year 1949. However, on the oral argument in this court, counsel for West India read to this court a telegram from the Chairman of the Conference reading as follows: "You are authorized to advise the Circuit Court of Appeals that the Gulf and South Atlantic Havana Steamship Conference by unanimous vote has agreed if requested by Seatrain to extend contract shippers cancellation date from November 1 to December 1, 1948." Counsel for West India further stated that the Conference would extend the time until ten days after the Commission's decision, if that decision were not reached by December 1, 1948. He further agreed that should any of the Conference Steamship lines reduce their rates, the preliminary injunction should be modified to permit corresponding reductions to be made by the defendant.
Pertinent sections of the statute read as follows: 46 U.S.C.A. § 812: "No common carrier by water shall, directly or indirectly, in respect to the transportation by water of passengers or property between a port of a State, Territory, District, or possession of the United States and any other such port or a port of a foreign country —
* * * * * *"Second. Use a fighting ship either separately or in conjunction with any other carrier, through agreement or otherwise. The term `fighting ship' in this Act means a vessel used in a particular trade by a carrier or group of carriers for the purpose of excluding, preventing, or reducing competition by driving another carrier out of said trade."
§ 815: "It shall be unlawful for any common carrier by water, or other person subject to this Act, either alone or in conjunction with any other person, directly or indirectly —
"First. To make or give any undue or unreasonable preference or advantage to any particular person, locality, or description of traffic in any respect whatsoever, or to subject any particular person, locality, or description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever."
§ 816: "No common carrier by water in foreign commerce shall demand, charge, or collect any rate, fare, or charge which is unjustly discriminatory between shippers or ports, or unjustly prejudicial to exporters of the United States as compared with their foreign competitors. Whenever the commission finds that any such rate, fare, or charge is demanded, charged, or collected it may alter the same to the extent necessary to correct such unjust discrimination or prejudice and make an order that the carrier shall discontinue demanding, charging, or collecting any such unjustly discriminatory or prejudicial rate, fare, or charge."
§ 821. "Complaints to commission and investigations. Any person may file with the commission a sworn complaint setting forth any violation of this chapter by a common carrier by water, or other person subject to this chapter, and asking reparation for the injury, if any, caused thereby. The commission shall furnish a copy of the complaint to such carrier or other person, who shall, within a reasonable time specified by the commission, satisfy the complaint or answer it in writing. If the complaint is not satisfied the commissions shall, except as otherwise provided in this chapter, investigate it in such manner and by such means, and make such order as it deems proper. The commission, if the complaint is filed within two years after the cause of action accrued, may direct the payment, on or before a day named, of full reparation to the complainant for the injury caused by such violation. * * *"
§ 822. "Orders of the commission relating to any violation of this Act shall be made only after full hearing, and upon a sworn complaint or in proceedings instituted of its own motion. * * *"
§ 828. "That in case of violation of any order of the commission, other than an order for the payment of money, the commission, or any party injured by such violation, or the Attorney General, may apply to a district court having jurisdiction of the parties; and if, after hearing, the court determines that the order was regularly made and duly issued, it shall enforce obedience thereto by a writ of injunction or other proper process, mandatory or otherwise."
§ 876: "The commission is authorized and directed in aid of the accomplishment of the purposes of this Act —
"(a) To make all necessary rules and regulations to carry out the provisions of this Act;
"(b) To make rules and regulations affecting shipping in the foreign trade not in conflict with law in order to adjust or meet general or special conditions unfavorable to shipping in the foreign trade, whether in any particular trade or upon any particular route or in commerce generally and which arise out of or result from foreign laws, rules, or regulations or from competitive methods or practices employed by owners, operators, agents, or masters of vessels of a foreign country * * *."
Rathbone, Perry, Kelley Drye, of New York City (Nicholas Kelley and T.R. Iserman, both of New York City, Arthur L. Winn, Jr., of Washington, D.C., Frank H. Heiss and Edward K. Bachman, both of New York City, of counsel), for appellant.
Burlingham, Veeder, Clark Hupper, of New York City (Roscoe H. Hupper, John L. Galey, and Norman M. Barron, all of New York City, and William Radner, Odell Kominers, and Henry G. Fischer, all of Washington, D.C., of counsel), for appellee West India Fruit Steamship Co., Inc.
Paul D. Page, Jr., and George F. Galland, both of Washington, D.C., for United States Maritime Commission.
Hirsh, Shalleck, Krakower Gelwan, of New York City, for intervenor Port of Palm Beach District.
Bleakley, Platt, Gilchrist Walker, of New York City, for intervenor Trustees of Florida East Coast Ry. Co.
Purrington McConnell, of New York City, for intervenor Empresa Naviera de Cuba, S.A.
Tompkins, Boal Tompkins, of New York City, and Terriberry, Young, Rault Carroll, of New Orleans, La., for intervenor Lykes Bros. Steamship Co., Inc.
Kreutzer, Heller Selman, of New York City, for intervenor J.M. McCauley Son.
Winn, Graubard Shapiro, of New York City, for intervenor Port Commission of City of Beaumont, Lake Charles Harbor Terminal District, etc.
Bernstein, Weiss, Tomson, Hammer Parter, of New York City (Michael C. Bernstein and Eugene M. Parter, both of New York City, of counsel), for intervenor Piowatz-Bergart Co., Inc.
Battle, Levy, Fowler Neaman, of New York City, for intervenor, Dakota Chief Sales Co.
John P. McGrath, of New York City (Seymour Quel and Charles F. Preusse, both of New York City, of counsel), for intervenor City of New York.
Before AUGUSTUS N. HAND, CLARK, and FRANK, Circuit Judges.
1. Defendant, Seatrain, contends that the district court lacked power to issue an injunction in aid of the Commission, regardless of the facts. We cannot agree, especially as the Commission has intervened as a party plaintiff. See California v. United States, 320 U.S. 577, 584, 585, 64 S.Ct. 352, 88 L.Ed. 322; F.R.C.P. 24(b) as recently amended; S.E.C. v. U.S. Realty Improvement Co., 310 U.S. 434, 60 S.Ct. 1044, 84 L.Ed. 1293; Berger, Intervention by Public Agencies in Private Litigation in the Federal Courts, 50 Yale L.J. (1940) 65. We consider inapposite U.S. Navigation Co. v. Cunard, 284 U.S. 474, 52 S.Ct. 247, 76 L.Ed. 408. That decision imposed limitations on the power of the courts to interfere with the exercise of an administrative agency's powers. Here the court was asked to assist the Commission by preserving the status quo until it could determine whether it had statutory jurisdiction, and, if so, how it should act. Appellant relies on S.E.C. v. Long Island Lighting Co., 2 Cir., 148 F.2d 252. This court as at present constituted does not agree with that decision. Moreover, the Supreme Court by granting certiorari, accompanied by a stay, wiped out that decision's practical effects. In any event, the rationale of the Long Island case lacks pertinence here; for there the majority rested its conclusion on a holding that the S.E.C. unmistakably lacked any possible jurisdiction; on the facts now before us, we are unable so to hold as to the Commission here. On that basis, the district court had authority to issue an injunction.
324 U.S. 837, 65 S.Ct. 869, 89 L.Ed. 1401.
Presumably because of the practical effects of the stay, the Supreme Court, holding the case moot, vacated the judgment of this court, and directed the district court to dismiss the complaint. 325 U.S. 833, 65 S.Ct. 1085, 89 L.Ed. 1961.
2. In exercising his discretion, the trial judge was obliged, of course, to balance the harms the injunction might do to the respective parties. Having in mind the statutory provision for award of damages by the Commission, we cannot say that he decided erroneously.
Appellant emphasized a fact apparently not called to the attention of the district judge, i.e., the damage to appellant which would result if the Conference made contracts enduring for the calendar year 1949. Whether because of that fact, the issuance of the injunction should be deemed an abuse of discretion, we need not decide, in the light of the telegram quoted above. Considering that telegram, we remand with directions that the injunction be made conditional upon all members of the Conference joining in the offers contained in the telegram and in oral argument, and that they consent that the cancellation date be extended until December 1, 1948 or, if the Commission has not then entered its decision, until thirty days after such decision. The injunction should also be modified so that if any of the Conference steamship lines reduce their rates, Seatrain will be permitted to make a corresponding reduction. It goes without saying that we do not decide that defendant has violated the statute.
Modified and affirmed.